Kathmandu. The Nepal Rastra Bank (NRB) has decided to withdraw liquidity of Rs 70 billion after excess liquidity accumulated in the banking system. The central bank is going to collect the amount from banks and financial institutions through the deposit collection tool on September 10.
According to the Rastra Bank, the auction will be held at 3 pm today. Banks and financial institutions will be able to participate through bidding to keep deposits in the Rastra Bank.
According to the central bank, the bidding of deposit collection will be done on the basis of interest rates. Participating institutions can also bid multiple at different interest rates. According to the notice issued by the Rastra Bank, only ‘A’, ‘B’ and ‘C’ class banks and financial institutions will be allowed to participate in the deposit collection instrument.
It will be a 2-month deposit collection tool. Under this, the principal and interest of the amount kept by the banks and financial institutions will be paid on November 5.
In recent times, the amount of investment in the banking system has been increasing due to the high deposit growth compared to the loan expansion. The central bank has been using deposit collection tools for liquidity management after the interbank interest rates started to come under pressure due to excess liquidity.
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