Nepal Rastra Bank to Withdraw Rs 40 Billion Liquidity

Kathmandu. Nepal Rastra Bank is withdrawing Rs 40 billion today Wednesday to manage excess liquidity in the financial system. The central bank is withdrawing the amount through the deposit collection instrument for 42 days after the amount of deposits in banks and financial institutions continuously increased to more than Rs 77 kharba. The bank has taken this step to control fluctuations that may occur in interest rates as market liquidity pressure increases. The central bank regularly withdraws liquidity through deposit collection instruments and permanent deposit facilities to manage excess liquidity and interest rates in the financial system. Only 'A', 'B', and 'C' class banks and financial institutions licensed by the central bank will be able to participate in today's bidding process. The interest rate will also be determined through bidding in this bidding process which will be conducted through the online purchase system. The minimum amount that can be bid is Rs 10 crore, and the maximum amount that can be bid is up to the total amount called, which is divisible by Rs 5 crore. In the distribution of the long-term deposit collection amount, the distribution will be done in order up to the called amount by prioritizing those who bid at the lowest rate based on the interest rate bid by the counterparties. The principal and interest payment of the deposit collected today will be on Ashad 10, 2083. According to the central bank's open market transaction procedures, there is a provision to use a deposit collection instrument with a maximum tenure of 6 months under structural open market transactions to manage excess liquidity of a long-term nature in the financial market. Implementing this provision, the central bank has been using the deposit collection instrument repeatedly in recent times.