Nepal Rastra Bank to Collect NPR 20 Billion in Deposits to Manage Excess Liquidity

Nepal Rastra Bank will collect NPR 20 billion in deposits today, Sunday, as part of its ongoing effort to manage excess liquidity in the financial system. With the current liquidity remaining high, the central bank has decided to collect deposits for 12 days through the deposit collection tool, an auction-based method.

Currently, total deposits in the system have exceeded NPR 75 trillion. The central bank has been using deposit collection tools and permanent deposit facilities to manage liquidity and interest rates in the financial system.

Only 'A', 'B', and 'C' category banks and financial institutions that are authorized by Nepal Rastra Bank can participate in this auction. When distributing long-term deposit collection amounts, the counter parties that offer the lowest interest rates will be prioritized, and the amounts will be allocated progressively up to the total collected amount.

The auction will be conducted through an online purchase system, and the interest rates will be determined via this bidding process. According to Nepal Rastra Bank, the principal and interest for the deposit collection tool used in today’s auction will be paid on 25th Poush 2082.

The minimum amount that can be bid is NPR 10 crore, and the maximum bid amount is NPR 5 crore. The total amount will be allocated up to the full requested amount, with any remaining part being left to the next bidders.

Following the procedures of open market operations, the central bank continues to use the deposit collection tools to manage long-term liquidity and interest rates in the financial market.