Nepal Rastra Bank to Absorb Rs. 50 Billion in Deposits Today Through Bidding Process

Nepal Rastra Bank (NRB) is set to absorb Rs. 50 billion in deposits from banks and financial institutions today. The central bank will conduct the collection through a bidding process at 2:00 PM this afternoon.

NRB will withdraw the deposits for a period of 86 days, and commercial banks, development banks, and finance companies are eligible to participate. These institutions must propose the interest rate at which they are willing to place their deposits with NRB.

Banks will also be allowed to submit multiple bids, and the bids offering the lowest interest rates will be prioritized by the central bank.

At present, Nepal’s banking system is experiencing excess liquidity, largely due to weak loan demand. Banks have accumulated large volumes of idle funds, and NRB has been regularly absorbing liquidity through such auctions. Today’s Rs. 50 billion deposit absorption is also part of these ongoing liquidity management efforts.

Banks can bid from a minimum of Rs. 10 crore up to the total invited amount, in increments divisible by Rs. 5 crore. The deposits placed at NRB under this instrument can also be used as collateral when borrowing from other banks and financial institutions.

NRB will repay the principal and interest on these deposits on 5th Falgun, after the completion of the 86-day period. With loan demand remaining low and liquidity piling up in the banking system, this measure is considered an effective tool for stabilizing liquidity conditions.