Deposit Auction Facility Soars 183% to Rs 671.7 Billion, Reflecting Tight Liquidity Management by NRB

According to the Nepal Rastra Bank (NRB) Central Bank Survey – Mid-September 2025, the Deposit Auction and Standing Deposit Facility (SDF) skyrocketed by 183.5% year-on-year, reaching Rs 671.7 billion, compared to Rs 236.95 billion in the same period of the previous fiscal year. This remarkable increase underscores NRB’s aggressive approach toward tight liquidity management and monetary sterilization amid rising excess reserves in the banking system.

The sharp rise in deposit auctions reflects the central bank’s strategy to absorb surplus liquidity through short-term deposit instruments offered to commercial banks and other financial institutions. With increasing foreign reserve inflowsand a growing monetary base, NRB intensified the use of its SDF window to maintain monetary discipline and stabilize short-term interbank interest rates within its policy corridor.

This policy response aligns with NRB’s ongoing efforts to counter the liquidity surge stemming from expanding foreign assets, which rose by 34.3% to Rs 2.74 trillion. The deposit auction operations serve as a tool to neutralize excess liquidity, preventing inflationary pressure while ensuring that credit growth remains aligned with economic fundamentals.

Furthermore, the expansion of SDF to over Rs 671.7 billion demonstrates NRB’s active stance in managing market liquidity without over-relying on traditional instruments such as repo or reverse repo operations. It highlights a shift toward fine-tuned liquidity absorption, ensuring stable interest rates and promoting financial sector discipline.