Nepal Rastra Bank to Withdraw Rs 20 Billion to Manage Excess Liquidity

In a bid to manage excess liquidity in the financial system, Nepal Rastra Bank (NRB) is set to withdraw Rs 20 billion from the market today through its deposit collection instrument.

According to the central bank, the funds will be collected for a 21-day period. NRB has been regularly conducting such liquidity absorption operations every Sunday and Wednesday, and today’s move is part of that routine effort to maintain monetary balance.

As per the notice issued by the central bank, banks and financial institutions interested in participating in the deposit collection process can submit their bids online until 3 PM today. The minimum bid amount is set at Rs 100 million, while the maximum is capped at Rs 5 billion per bid.

Only Class ‘A’, ‘B’, and ‘C’ licensed banks and financial institutions are eligible to take part in the bidding. The bidding will be based on interest rates, and participants are allowed to submit multiple bids at different rates.

Furthermore, NRB has clarified that the deposit collection instruments purchased through this process can be used as collateral at other banks and financial institutions.

The move comes amid concerns that high liquidity could fuel inflation if not properly managed. By absorbing excess money from the banking system, the central bank aims to maintain economic stability and control inflationary pressure.