Nepal Rastra Bank Withdraws NPR 90 Billion to Manage Excess Liquidity
On October 7, Nepal Rastra Bank announced NPR 90 billion withdrawal via deposit instruments to curb excess liquidity.
Nepal Rastra Bank (NRB) plans to withdraw NPR 90 billion from the banking system on Tuesday, October 7, to manage surplus liquidity. The central bank will use deposit collection instruments through an online auction process, with interest rates determined through bidding.
According to NRB, the principal and interest on these instruments will be payable on Kartik 2, 2082 BS. The auction allows banks and financial institutions authorized under categories ‘A’, ‘B’, and ‘C’ to participate, with bids ranging from a minimum of NPR 10 crore and divisible up to a maximum of NPR 5 crore, ensuring full allocation of the offered amount.
Currently, total deposits in the financial system exceed NPR 73 billion. NRB has been repeatedly using deposit collection instruments and standing deposit facilities to regulate excess liquidity and maintain market interest rates.
During allocation, the lowest interest rate bids are prioritized until the full auction amount is allocated. The central bank’s open market operations framework allows the use of long-term deposit instruments for up to six months to manage persistent excess liquidity in the financial market. This mechanism has been a recurring tool for NRB to stabilize liquidity and ensure orderly interest rate management.