Nepal Rastra Bank to Absorb Additional Rs. 55 Billion Amid Excess Liquidity

Excess liquidity pressure in the financial system continues, and the Nepal Rastra Bank (NRB) has announced it will absorb an additional Rs. 55 billion through deposit collection today. The move comes as a Rs. 50 billion deposit, earlier absorbed on Shrawan 4, matures today.

Banks and financial institutions have been facing a persistent liquidity surplus for a long time. Despite continuously declining interest rates, loan disbursement has remained sluggish. To manage this, NRB has repeatedly been pulling funds from the banking system. Within just one and a half months of the current fiscal year, the central bank has already absorbed Rs. 378.10 billion in liquidity.

This time, NRB will collect Rs. 55 billion for 21 days through its deposit collection instrument. The bidding will be conducted online at 3 PM today, and the deposit will be purchased the same day. Interested applicants can bid for a minimum of Rs. 1 billion, and amounts must be in multiples of Rs. 500 million thereafter, up to the total announced amount. The maturity date for this deposit, including both principal and interest payments, has been set for Ashoj 5.

The liquidity surplus, which started intensifying in mid-last fiscal year, has now become a major challenge for Nepal’s banking sector. With slowing market demand and weak business activity, banks have been unable to expand credit as expected, leaving NRB under constant pressure to manage the excess liquidity in the system.