Excess Liquidity in Banking System, Nepal Rastra Bank to Absorb Rs 20 Billion Today
Nepal Rastra Bank continues liquidity absorption as excess funds pile up in the banking system.
Nepal Rastra Bank is set to absorb Rs 20 billion from the banking system today amid excess liquidity.
The central bank will conduct a bidding process at 3 PM through its deposit collection instrument. Banks and financial institutions can participate with a minimum bid of Rs 100 million and in multiples of Rs 50 million.
The bidding will be based on interest rates, and multiple rate bids will also be accepted. Only Class A, B, and C financial institutions are eligible to participate.
The instrument has a maturity period of 44 days, with principal and interest to be paid on Asar 5.
Due to weak credit demand, banks are currently holding excess liquidity and are compelled to park funds at low interest rates of around 3% with the central bank.