With banks and financial institutions holding excess funds available for lending, Nepal Rastra Bank is taking steps to manage liquidity by pulling Rs 50 billion from the system. This will be done for a 42-day period using the deposit collection instrument.
The central bank has invited class A, B, and C banks and financial institutions to participate in an online bidding process by 3 PM today. According to the notice, bids must be in multiples of Rs 50 crore with a minimum of Rs 10 crore. If bids don’t fully utilize the total amount, the remaining funds will be allocated accordingly.
Institutions that purchase these instruments can use them as collateral with other banks and financial institutions. Bidding must be done on an interest-rate basis, and multiple bids with varying interest rates are allowed.
The move comes as available loanable funds have risen sharply since the start of the new fiscal year. Rastra Bank data shows that liquidity reached Rs 10.5 trillion by the end of Asar, compared to an average of Rs 6 trillion in the previous 11 months.
