Nepal Rastra Bank (NRB) has announced plans to absorb Rs 100 billion from the banking system through an 83-day deposit collection instrument as part of its efforts to manage excess liquidity in the financial market.

According to a notice issued by the Monetary Management Department, the central bank will conduct an online auction for the deposit collection instrument, with bidding remaining open until 3:00 PM today. The instrument will also be issued on the same day.

The interest rate on the deposit instrument will be determined through a competitive bidding process, while the principal and accrued interest will be repaid on October 13, 2026 (Ashoj 27, 2083).

Eligible participants may submit bids ranging from a minimum of Rs 100 million up to the total auction amount. Institutions are also allowed to submit multiple bids at different interest rates.

Only Class 'A', 'B', and 'C' banks and financial institutions licensed by Nepal Rastra Bank are eligible to participate. Each bid must specify both the deposit amount and the proposed interest rate, with rates quoted up to four decimal places.

The central bank stated that bids offering the lowest interest rates will receive priority until the announced amount is fully allocated. If bids at the same interest rate exceed the remaining allocation, the amount will be distributed on a pro-rata basis.

NRB also clarified that the Open Market Operations Committee retains the authority to accept or reject bids either fully or partially.

The deposit collection instrument will qualify as an investment portfolio asset for participating institutions. However, the deposited amount cannot be counted toward the Cash Reserve Ratio (CRR), although it will be eligible for Statutory Liquidity Ratio (SLR) and liquidity ratio calculations. The central bank also confirmed that premature redemption will not be permitted before the instrument's maturity.