KATHMANDU, Dec 25: Nepal Rastra Bank (NRB) is set to withdraw an additional Rs 35 billion from the banking system, through receiving deposit collection from the commercial banks, while starting the process from Wednesday.

Amid the commercial banks witnessing excess loanable funds dumped with them due to the excessive deposit collection and low lending, the central bank is stepping up to implement the monetary tool to mop out excessive liquidity from the country’s banking system. This collection drive, spanning 14 days, invites applications from banking and financial entities interested in participation. By January 10, 2024, NRB will unveil the operation’s terms and interest rates.

Banks concerned are eligible to apply to collect their amounts ranging between Rs 10 million to Rs 50 million. Prioritization will center on descending interest rates, with the lowest bids taking precedence.

Participation is open exclusively to banks and financial institutions under the categories “A,” “B,” and “C” as classified by Nepal Rastra Bank. The application process mandates clear specification of desired amounts and interest rates (up to four decimal places), emphasizing lower rates and pro-rata distribution for similar bids.

NRB’s recent efforts to bolster market liquidity have been evident. Within a month of initiating collections from November 22 in the fiscal year 2080/81, the central bank amassed an impressive Rs 197.25 billion.

Specifically, within four sessions since December 17, NRB withdrew Rs 70 billion, having initially invited applications totaling Rs 142.8 billion, but receiving requests amounting to Rs 139.8 billion from diverse banks.

Despite substantial reservations for investments, banks maintained notably low interest rates ranging from 0.7048% to 2.9957% for deposits placed with the central bank.

 
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