Nepal Rastra Bank to Absorb Rs 40 Billion Liquidity Through Deposit Collection Auction

Nepal Rastra Bank (NRB) is set to withdraw Rs 40 billion from the financial system on Wednesday through its deposit collection instrument. The move comes amid persistent excess liquidity in the banking system.

Currently, total deposits in the banking sector have exceeded Rs 7.4 trillion. The central bank has been using deposit collection tools and the Standing Deposit Facility (SDF) to manage liquidity and stabilize short-term interest rates. Only Class ‘A’, ‘B’, and ‘C’ banks and financial institutions licensed by NRB will be eligible to participate in the auction.

According to NRB, the bids will be ranked in ascending order of the offered interest rates, giving priority to those quoting the lowest rates until the full Rs 40 billion target is met. The bidding will take place online, and interest rates will be determined through competitive bidding. The maturity and interest payment date for this deposit collection instrument has been set for Baisakh 9, 2083 (April 21, 2026).

Each participant can bid for a minimum of Rs 100 million (10 crore) and in multiples of Rs 50 million (5 crore) thereafter. As per the central bank’s open market operations procedure, such long-term deposit collection tools can be used when structural excess liquidity persists in the market — typically for up to six months — to maintain orderly market interest rates.

NRB has been repeatedly deploying this mechanism to absorb long-term surplus liquidity and ensure monetary discipline in the banking system.