Kathmandu: Nepal Rastra Bank (NRB) is set to withdraw Rs 40 billion from the financial system Wednesday via a deposit collection instrument auction, as excess liquidity persists in the banking sector.
Total deposits in the system have now exceeded Rs 74 trillion. The central bank has been managing surplus liquidity and interest rates through deposit collection tools and permanent deposit facilities.
Only Class ‘A’, ‘B’, and ‘C’ licensed banks and financial institutions are eligible to participate in the auction.
In allocating the long-term deposit amount, bids will be prioritized starting with the lowest interest rate offered by counterparties, with funds distributed sequentially up to the total announced amount.
Due to the high volume of deposits, the auction will be conducted online through the purchase system. The interest rate will be determined via competitive bidding, and both principal and interest for the deposit collection instrument auctioned today will be repaid on 21 April 2026, according to NRB.
The minimum bid amount is Rs 100 million, with the maximum being a multiple of Rs 50 million, up to the total announced amount.
Under NRB’s Open Market Operations Procedure, if long-term excess liquidity is observed in the financial market, the Operations Committee may, as needed, use long-term deposit collection instruments of up to six months under structural open market operations to manage liquidity and stabilize market interest rates.
Relying on this provision, the central bank has repeatedly deployed deposit collection instruments in recent times.
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