According to Public Debt Management Department of NRB, the central bank collected Rs 5 billion directly from BFIs through auction after the banking system observed surplus liquidity.
NRB had introduced the new instrument through its Monetary Policy for Fiscal Year 2014/15 after its other short-term instruments, including frequent reverse repos, failed to resolve the liquidity surplus problem in the banking system.
Though the number of participating BFIs and total bid amounts for the deposit was not available immediately, the weighted interest rate was fixed at 0.86 percent, an official at the Public Debt Management Department at NRB told Republica.
“We witness liquidity surplus in the banking system after some weeks of comfortable position. That is why we decided to collect deposits from BFIs,” the official added.
Revised interest rate corridor system introduced
The interest rate is the highest among the deposit collections held so far. The weighted interest rate of the last deposit auction held on February 18 for Rs 5 billion was 0.69 percent, up from 0.25 percent fixed in the previous deposit auction for Rs 10 billion held on December 27 last year.
According to an official of NRB, the banking system has liquidity excess to the tune of Rs 35 billion. It has already collected Rs 85 billion through this instrument on different occasions in this fiscal year so far. The maturity period of the deposit auction, whose interest rates are fixed through auction, is 90 days. This is the tenth deposit collection carried out by NRB.
