NRB to Issue Rs 25 billion One-Year Treasury Bill
12th January 2026, Kathmandu
Nepal Rastra Bank (NRB) is set to issue treasury bills worth Rs 25 billion through an auction under its open market operations framework on Monday, Poush 28, 2082 (January 12, 2026). The central bank has announced that it will issue a one-year maturity instrument titled Nepal Rastra Bank Treasury Bill 2083 (Cha). This issuance is a significant part of the central bank’s liquidity management strategy, specifically designed to regulate excess liquidity currently residing in the banking system while ensuring overall monetary stability.
NRB Treasury Bill Issuance
As of early January 2026, Nepal’s banking system has been characterized by high levels of investable funds, primarily driven by strong remittance inflows and a cautious approach to credit expansion by the private sector. By issuing these treasury bills, NRB aims to mop up a portion of this surplus cash, preventing potential inflationary pressures and stabilizing short-term interest rates.
Auction Details and Timeline
According to the central bank, the bidding process for the treasury bills will be conducted exclusively through the Online Bidding System Software. The auction window is scheduled to remain open until 12:00 noon on Poush 28, 2082. The formal issuance of the treasury bills will take place on the same day immediately following the conclusion of the auction.
The interest rate, often referred to as the discount rate for treasury bills, will be determined through a competitive bidding process. This market-determined rate serves as an important indicator for the broader financial market, reflecting the current demand for risk-free government-backed securities. Principal repayment is scheduled for the maturity date exactly one year from issuance, while interest will be settled as per the terms specified by the Monetary Management Department.
Eligible Participants and Bid Requirements
Participation in this specific auction is restricted to banks and financial institutions (BFIs) licensed by Nepal Rastra Bank under categories A, B, and C. This group encompasses commercial banks, development banks, and finance companies. These institutions use treasury bills not only for interest income but also as a primary tool for meeting their regulatory liquidity requirements.
The central bank has established clear parameters for the bidding process:
The minimum bid amount is fixed at Rs 40 million.
Additional bids must be submitted in multiples of Rs 10 million.
Participants must quote their proposed interest rates up to four decimal places.
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Bidders can submit multiple bids at different interest rates up to the total announced amount of Rs 25 billion.
Bidding and Allocation Mechanism
NRB utilizes a Dutch auction style for allocation, where bids are accepted starting from the lowest interest rate (the cheapest for the bank) and moving toward higher rates until the total amount of Rs 25 billion is reached. In instances where multiple participants submit bids at the same cut-off interest rate, the remaining amount is allocated on a pro-rata basis among those bidders.
The Open Market Operations Committee of NRB retains the full authority to accept or reject any bid, either in part or in its entirety. This discretion allows the central bank to maintain control over the cost of borrowing and ensure that interest rates do not deviate significantly from the policy corridor established in the current monetary policy.
Settlement and Penalties for Non-Compliance
The settlement process is highly automated to ensure efficiency and reliability. The total amount for all accepted bids will be debited directly from the respective counterparty’s account maintained at Nepal Rastra Bank on the day of issuance. It is mandatory for participating institutions to maintain a sufficient balance in their NRB accounts to cover their successful bids.
Failure to fulfill the settlement requirement carries severe consequences. If a bank or financial institution fails to maintain the necessary balance, its bid is automatically canceled. Furthermore, the institution will be hit with a financial penalty amounting to 2.5 percent of the bid value. Perhaps more significantly, the defaulting institution will be barred from participating in any future NRB auctions for a period of six months. This strict provision is designed to ensure that only serious and liquid players participate in the bidding process.
Regulatory Treatment of Treasury Bills
Treasury bills are highly favored by Nepali financial institutions due to their favorable regulatory treatment. While the investment amount in these bills does not count toward the Cash Reserve Ratio (CRR)—which must be held in cash at NRB—it is fully eligible for inclusion in the Statutory Liquidity Ratio (SLR).
Currently, commercial banks are required to maintain an SLR of 12 percent, while development banks and finance companies must maintain 10 percent. By investing in these one-year bills, BFIs can earn a competitive interest rate while simultaneously fulfilling their statutory obligations to hold liquid assets. Additionally, these bills are widely used as collateral for Repo operations and Inter-bank lending.
Monetary Policy Context in 2026
The issuance of the Rs 25 billion treasury bill comes at a time when the weighted average inter-bank rate has remained at lower levels, recently recorded around 2.74 percent. This indicates that the banking system is currently “flush” with cash. The NRB’s proactive mop-up through the Treasury Bill 2083 (Cha) is a classic example of “absorption” under the open market operations framework. It complements other tools like the Standing Deposit Facility (SDF), which the bank has been using frequently to manage daily liquidity fluctuations.
Conclusion
The Rs 25 billion one-year treasury bill issuance by Nepal Rastra Bank underscores the central bank’s commitment to maintaining a balanced and stable financial environment. By offering a secure, market-rate investment for banks and financial institutions, NRB is effectively managing the surplus liquidity that could otherwise lead to excessive volatility in the exchange rate or asset prices. With the 35-day bidding window for property auctions and now the massive liquidity mop-up, the central bank is sending a clear signal of active market intervention to start the year 2082/83.
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