Kathmandu: Nepal Rastra Bank (NRB) is set to withdraw Rs 40 billion from the market to manage excess liquidity.
The central bank will mop up the amount through a deposit collection instrument for a period of 56 days. The bidding and issuance process will take place on Sunday (April 5). Interested banks and financial institutions must submit their bids through an online system by 3 pm.
Only ‘A’, ‘B’, and ‘C’ class banks and financial institutions will be eligible to participate in the bidding process.
Nepal Rastra Bank has been using such deposit collection tools to manage surplus liquidity in the banking system. The principal and interest payments for this instrument are scheduled for June 30.
The interest rate will be determined through the bidding process. Participating institutions can bid a minimum of Rs 100 million, with amounts structured in multiples of Rs 50 million, up to the total issued amount.
The central bank stated that allocation will be made by prioritizing bids offering the lowest interest rates, followed in ascending order.
Funds collected through this instrument will be treated as part of the investment portfolio of the participating institutions and will not be counted toward the mandatory cash reserve ratio. However, they will be eligible for inclusion in the statutory liquidity ratio and overall liquidity calculations as per central bank regulations.
People’s News Monitoring Service
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