Nepal Rastra Bank Mandates 90% Daily Cash Reserve Requirement for BFIs

Nepal Rastra Bank (NRB) has introduced a new directive requiring banks and financial institutions (BFIs) under categories 'A', 'B', and 'C' to maintain at least 90% of their mandatory Cash Reserve Ratio (CRR) on a daily basis. The new rule will be effective from June 1, 2025 (Jestha 18, 2082 BS).

Previously, from Bhadra 12, 2079 BS, BFIs were required to maintain 4% of their total deposit liabilities as CRR at NRB, with a minimum of 70% of that amount held daily. However, under the recent monetary policy review for the current fiscal year, the central bank has raised this minimum threshold to 90%.

According to the NRB directive:

> “Licensed ‘A’, ‘B’, and ‘C’ class institutions must maintain 4% of their total deposit liabilities as mandatory CRR at Nepal Rastra Bank, and at least 90% of this amount must be held on a daily basis starting from Jestha 18, 2082.”

How Is CRR Calculated?

To calculate the mandatory reserve, the weekly average deposit base is used. For deposit liability calculation, the total deposits from Sunday to Saturday are summed and divided by seven to determine the daily average. Similarly, for reserve calculations, the total daily reserves over a 14-day period (Sunday to the second Saturday) are summed and divided by 14 to obtain the daily average.

Purpose of the Directive

This move aims to strengthen financial discipline among BFIs and ensure smoother implementation of monetary policy. It is also expected to enhance the overall stability and transparency of Nepal’s financial system.