NRB to Withdraw Rs. 70 Billion from Banking System Amid Excess Liquidity

Kathmandu, Jestha 20 – Nepal Rastra Bank (NRB) is set to withdraw Rs. 70 billion from the banking system today in response to excessive liquidity in the market. Despite Rs. 212 billion yet to mature, the central bank is using its deposit collection instrument to mop up surplus funds.

The deposit collection will be for a 21-day period, with bidding scheduled for 3 PM today. Bids must be placed in a minimum amount of Rs. 100 million, with increments in multiples of Rs. 50 million. Any leftover amount after division will not be accepted. The maturity date, including principal and interest, is set for Ashad 8 (approximately three weeks from today).

The interest rate for this deposit collection will be determined through a competitive bidding process. Only 'A', 'B', and 'C' class banks and financial institutions licensed by NRB are eligible to participate.

Each participating institution must specify both the amount they wish to deposit and the proposed interest rate (up to four decimal places). NRB will prioritize bids offering the lowest interest rates and allocate the funds accordingly. In case of identical interest rates and excess bids, the allocation will be made on a pro-rata basis.

NRB reserves the right to accept or reject any or all bids, whether in full or in part.

Once bids are approved, the corresponding amount will be deducted from the counterparty’s account held at NRB and credited to a separate deposit account. If an approved bidder’s account lacks sufficient funds on the settlement date, that institution will be blacklisted and barred from future bidding.

On maturity, the principal and applicable interest will be refunded to the respective institution’s account at NRB.

This move signals NRB's proactive effort to stabilize liquidity and maintain monetary discipline in the banking system.