Nepal Rastra Bank to Absorb Rs. 40 Billion Excess Liquidity Through Deposit Collection Tool
Nepal Rastra Bank will withdraw Rs. 40 billion from the banking system on Shrawan 21, 2082 via a 35-day deposit collection auction.
ShareSanskar | Shrawan 21, 2082
Nepal Rastra Bank (NRB) is taking decisive steps to address one of its most pressing monetary challenges, managing an excess liquidity surge that has built up as deposits outpace sluggish credit demand. To counter this imbalance, the central bank is set to withdraw Rs. 40 billion from the banking system on Shrawan 21, 2082, through a short-term deposit collection auction. The operation, scheduled for 3 PM today, reflects a carefully crafted intervention aimed at safeguarding monetary stability and ensuring balanced financial market conditions.
The auction design reflects precision and efficiency. Participation is limited to ‘A’, ‘B’, and ‘C’ class banks and financial institutions, with bids starting at Rs. 1 billion and increasing in increments of Rs. 50 million. This structure encourages meaningful engagement from major market players while maintaining an orderly bidding process. Multiple interest rate bids will be accepted, allowing market forces to determine the final cost of liquidity absorption and enabling transparent price discovery.
The deposit collection instrument will carry a 35-day term, with both principal and interest maturing on Bhadra 25, 2082. This timeline gives the banking sector sufficient space to adjust operations without disrupting long-term planning, while allowing the central bank to quickly recalibrate liquidity levels. For now, many banks and financial institutions are parking surplus funds with NRB at an interest rate of around 3%, highlighting the lack of profitable lending opportunities in the current environment.
This move marks a significant moment in Nepal’s monetary policy evolution, showcasing NRB’s ability to deploy sophisticated tools to address emerging economic pressures. If successful, the initiative could set a new standard for liquidity management in the region, demonstrating that even in challenging market conditions, disciplined policy and strategic foresight can preserve stability and investor confidence.