NRB to Absorb Rs. 20 Billion to Manage Excess Liquidity

Nepal Rastra Bank (NRB) is set to absorb Rs. 20 billion from the banking system as part of its efforts to manage excess liquidity. The Monetary Management Department of NRB will issue a three-month deposit collection instrument through an auction. Eligible banks and financial institutions can participate in the auction through the Online Bidding System (OBSS) until 3 PM. The deposit will have a maturity period of 86 days, with principal and interest scheduled to be repaid at maturity. Only Class ‘A’, ‘B’ and ‘C’ banks and financial institutions licensed by NRB will be eligible to participate. The interest rate will be determined through the auction process, with participants allowed to submit bids at multiple interest rates. The minimum bid amount is Rs. 10 crore, while the total bids must be in multiples of Rs. 10 crore and remain within the total amount called by NRB. Priority will be given to bidders offering the lowest interest rates, with allocation proceeding accordingly. The funds collected through the instrument cannot be counted toward the Cash Reserve Ratio (CRR). However, they can be included in the Statutory Liquidity Ratio (SLR) and Liquidity Ratio. The deposit can also be used as collateral with banks and financial institutions other than Nepal Rastra Bank. Early or pre-mature repayment will not be allowed.