Liquid Funds Grow 15.9% with Higher Balances Abroad and in NRB – Banking System Liquidity Strengthens

According to the Nepal Rastra Bank (NRB) Mid-September 2025 “Other Depository Corporation Survey (y-o-y)”, liquid funds in the banking system increased by 15.9% year-on-year, reaching Rs 737.3 billion, up from Rs 636.3 billion in the same period of the previous fiscal year. This significant growth highlights the improvement in overall banking liquidity, supported by higher foreign reserves, increased balances held abroad, and stronger deposits maintained at the central bank.

A detailed breakdown shows that balances held abroad surged by 34.5%, rising from Rs 219.7 billion to Rs 295.4 billion, reflecting greater foreign asset accumulation by commercial banks amid strong remittance inflows and foreign exchange earnings. Similarly, balances maintained with NRB climbed by 7%, reaching Rs 340.1 billion, indicating improved interbank liquidity and compliance with statutory liquidity ratios. Cash in hand also increased slightly by 3.5%, suggesting that banks are maintaining adequate vault cash to meet daily withdrawal needs.

Conversely, foreign currency in hand decreased by 7.4%, and cash in transit declined by 28.5%, implying smoother cash flow management and improved digital transaction efficiency across the banking network.

The robust expansion of liquid funds signals stronger liquidity buffers within the financial system, enhancing banks’ ability to respond to credit demand, absorb market shocks, and maintain monetary stability. It also aligns with NRB’s prudent liquidity management measures—such as standing deposit facilities and deposit auctions—which have effectively balanced short-term liquidity pressures while supporting credit growth.