Nepal Rastra Bank to Absorb Rs. 50 Billion Liquidity Today

Nepal Rastra Bank (NRB) is set to absorb Rs. 50 billion from the financial system today through the Deposit Collection Instrument (auction). The move comes as excess liquidity continues to remain in the banking system.

Currently, total deposits in the financial system have exceeded Rs. 7.2 trillion. To manage this surplus liquidity and stabilize interest rates, the central bank has been using Deposit Collection Instruments and the Standing Deposit Facility (SDF).

Only licensed banks and financial institutions of categories ‘A’, ‘B’, and ‘C’ will be eligible to participate in today’s auction. According to NRB, the principal and interest of the collected deposits will be settled on September 14 (Bhadra 29).

This step is viewed as a key measure to control excess liquidity and maintain stability in market interest rates.