KATHMANDU, April 7: Nepal Rastra Bank (NRB) is set to absorb Rs 35 billion in deposits from banks and financial institutions today through a bidding process scheduled for 3 PM.
The central bank will hold the funds for a period of 23 days. Commercial banks, development banks, and finance companies are eligible to participate by proposing interest rates. Institutions can submit multiple bids, with priority given to those offering the lowest rates.
NRB to mop Rs 100 billion from BFIs
The move comes amid a persistent surplus of liquidity in the banking sector. In response, NRB has been conducting regular deposit collection through such bidding mechanisms. In today’s auction, institutions can submit bids ranging from a minimum of Rs 10 million to a maximum of Rs 50 million. The remaining amount will be allocated among other participants until the full Rs 35 billion target is reached.
Banks may also use their NRB-held deposits as collateral in other financial transactions. The deposit collection will conclude on April 29, when principal and interest payments are due.
As loan demand remains low, excess liquidity continues to challenge the banking system. Currently, banks hold deposits totaling Rs 6.785 trillion, while loan disbursements stand at Rs 5.471 trillion. This puts the loan-to-deposit ratio at 79.38 percent—well below the regulatory cap of 90 percent—allowing banks to disburse an additional 10.62 percent, or around Rs 721 billion, in loans.
However, the ongoing economic slowdown has stalled loan growth, prompting NRB to repeatedly absorb excess funds to stabilize the financial system.