Kathmandu: Nepal Rastra Bank (NRB) is set to absorb Rs 50 billion liquidity from the banking system. The central bank announced that it will conduct the absorption through a deposit collection auction for 21 days on Sunday.
For the past two fiscal years, excess liquidity has persisted in the banking system, prompting NRB to regularly withdraw funds. On Sunday as well, with liquidity levels exceeding requirements, the central bank moved to absorb the surplus.
In addition, NRB has been providing the Standing Deposit Facility (SDF) to banks three times a week. The SDF rate is tied to the lower limit of the interest rate corridor. Under the current monetary policy, NRB reduced the deposit collection rate by 0.25 percentage points to 3.75 percent.
Since the beginning of the ongoing fiscal year, the central bank has already absorbed liquidity equivalent to Rs 4.294 trillion. Meanwhile, banks currently hold Rs 643.25 billion in NRB’s deposit collection auctions and SDF instruments due to excessive liquidity.
With this new move, NRB will absorb an additional Rs 30 billion on Sunday.
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