Nepal Rastra Bank to Absorb NPR 25B Deposits Amid Excess Liquidity
Nepal Rastra Bank is conducting a deposit collection auction today to absorb NPR 25B as liquidity continues to remain elevated.
Nepal Rastra Bank (NRB) is set to absorb NPR 25 billion in deposits today, Sunday, through its deposit collection instrument as liquidity in the banking system remains persistently high.
Total deposits in the financial system have now exceeded NPR 7.2 trillion, prompting the central bank to rely on deposit collection tools and the standing deposit facility to manage liquidity and stabilize interest rates.
The auction is open to licensed Class A, B, and C banks and financial institutions. Allocation will be based on the lowest interest rates quoted by counterparties, with bids prioritized until the announced amount is fully absorbed.
The minimum bid size is NPR 100 million, while the maximum must be divisible by NPR 50 million without remainder. The principal and interest of this auctioned deposit will mature and be repaid on Ashwin 12, 2082.
According to NRB, the bidding process will take place through the online trading system, and interest rates will be determined competitively.
Under the central bank’s Open Market Operations framework, long-term deposit collection instruments of up to six months can be deployed whenever excess liquidity persists. This mechanism has been frequently used in recent months as part of the NRB’s strategy to manage structural liquidity in the financial market.