Reserve Money Rises 10.1% as Currency in Circulation and Bank Deposits Expand – NRB Mid-Month Data

According to the Nepal Rastra Bank (NRB) Central Bank Survey – Mid-September 2025, the country’s reserve money (also known as base money or M0) increased by 10.1 percent year-on-year, reaching Rs 1.099 trillioncompared to Rs 998.87 billion in the same period last year. This expansion reflects a steady rise in currency in circulation, bank deposits with NRB, and overall liquidity in the financial system, signaling an accommodative monetary environment in early FY 2025/26.

The data shows that currency outside the banking system grew by 13.8 percent, reaching Rs 651.87 billion, while currency held by other depository corporations (ODCs) increased by 3.5 percent to Rs 98.21 billion. Similarly, commercial banks’ deposits at NRB rose by 8.1 percent to Rs 308.7 billion, reflecting banks’ stronger liquidity positions and greater compliance with reserve requirements.

Meanwhile, deposits from development banks and finance companies showed mixed trends — with development banks’ deposits declining slightly by 2.7 percent, while finance companies saw a modest contraction of 3.4 percent. This indicates that liquidity growth was mainly concentrated in commercial banks, aligning with the central bank’s focus on stabilizing short-term interest rates and maintaining sufficient cash reserves within the system.

The increase in reserve money also mirrors the growth in NRB’s foreign assets, which surged by 34.3 percent, driven by rising foreign exchange reserves and valuation gains. This influx of external funds contributed to the monetary base expansion, ensuring that banks retained adequate capacity for lending and liquidity management.