Nepal Rastra Bank is set to collect Rs. 30 billion in deposits today as excess liquidity remains in the banking system. The central bank has scheduled the deposit collection auction for 3 PM today.

Commercial banks, development banks and finance companies will be eligible to participate in the auction. Participating institutions will have to submit their proposed interest rates and may also submit multiple bids at different rates. Bids offering the lowest interest rates will receive priority.

Banks and financial institutions can participate with bids starting from Rs. 100 million up to the total amount called by the central bank. The deposits placed with Nepal Rastra Bank can also be used as collateral with other banks and financial institutions.

The principal and interest on the collected deposits will be repaid after 30 days, on Kartik 11.

With credit demand remaining relatively low and liquidity accumulating in the banking system, the deposit collection facility provides banks and financial institutions with an option to manage their excess liquidity.