Kathmandu: Nepal Rastra Bank (NRB) has announced that it will absorb Rs 30 billion from the banking system through deposit collection instruments via auction for a 25-day period.
The central bank has been regularly mopping up excess liquidity from the market over the past two fiscal years, and Wednesday’s move comes as a response to the continued surplus in the banking system.
In addition, NRB has been offering the Standing Deposit Facility (SDF) to banks three times a week. The SDF, which serves as the lower bound of the interest rate corridor, is currently set at the deposit collection rate. Under the current monetary policy, the deposit collection rate was reduced by 0.25 percentage points to 3.75 percent.
Since the beginning of the current fiscal year, NRB has already absorbed liquidity worth Rs 4.105 trillion. At present, the total deposits invested by banks in NRB’s auction-based deposit collections and SDF stand at Rs 656 billion. With Wednesday’s operation, an additional Rs 30 billion will be absorbed from the system.
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