KATHMANDU, Oct 12: Nepal Rastra Bank (NRB) is set to absorb Rs 50 billion from banks and financial institutions through a bidding process today (Sunday). The central bank said the move aims to reduce excess liquidity in the financial system, which has remained high in recent weeks. The interest rate will be determined through online bidding.
According to NRB, both the principal and interest of this deposit collection instrument will be settled on October 19, 2025. The minimum bid amount is Rs 100 million, and bids must be in multiples of Rs 50 million, up to the total called amount. The total deposits in the banking system currently exceed Rs 7.3 trillion.
Revised interest rate corridor system introduced
The central bank has been using deposit collection instruments and standing deposit facilities to manage liquidity and stabilize interest rates in the financial market.
Only banks and financial institutions licensed by NRB under categories ‘A’, ‘B’, and ‘C’ are eligible to participate in the auction. The allocation of long-term deposit collections will be based on the lowest interest rates quoted, with priority given accordingly until the full amount is absorbed.
As per NRB’s Open Market Operation Procedure, when long-term excess liquidity is observed in the financial market, the Market Operation Committee can conduct structural open market operations using long-term deposit collection instruments with a maturity period of up to six months. Following this provision, NRB has been employing such instruments periodically to regulate liquidity.
