Nepal Rastra Bank to Mop Up Rs. 100 Billion in Deposits Today, Invites Bids from BFIs

15th July 2026, Kathmandu

The central bank of Nepal is taking decisive action to manage the money supply within the country’s financial system.

NRB to Collect 100B Rupees in Deposits

Nepal Rastra Bank has announced a major initiative to absorb one hundred billion rupees, which is equivalent to one kharb rupees, from the domestic banking sector. This massive operation is being executed through a specialized deposit collection instrument, serving as a primary tool for liquidity management.

Managing the total volume of money circulating within the economy is crucial for maintaining financial stability. When commercial banks hold too much idle cash, it can lead to various economic imbalances. By taking this step, the central bank aims to balance the supply and demand of money, ensuring that the financial sector remains stable and predictable.

How the Liquidity Auction Works

The auction for this deposit collection is scheduled to take place today. The central bank has invited eligible financial institutions to submit their competitive bids through the online portal. This process allows the central bank to collect excess funds efficiently and redistribute them safely within the national regulatory framework.

Participation in this liquidity mop up is strictly limited to specific categories of financial institutions. Only Class A commercial banks, Class B development banks, and Class C finance companies are permitted to take part. This ensures that the institutions directly responsible for public deposits and credit lines are the ones participating in the liquidity adjustment.

The central bank has also set clear boundaries for the bidding process to keep it organized. The minimum amount that an institution can bid is set at one hundred million rupees, which is ten crore rupees. On the upper end, institutions can bid up to the entire announced amount of one hundred billion rupees.

Additionally, all bid amounts must be submitted in clear multiples of fifty million rupees, which is five crore rupees. Bids that do not follow this rule will not be processed by the bidding system. This structure helps streamline the allocation process for the central bank’s treasury department.

Competitive Interest Rates and Repayment Plans

The deposit collection process relies on a competitive interest rate system. Instead of the central bank setting a single interest rate, participating banks must specify the rate of return they require to deposit their excess funds. This setup encourages healthy competition among the participating financial institutions.

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To improve their chances of getting their funds accepted, banks are allowed to submit multiple bids at different interest rates. This bidding flexibility helps banks manage their cash portfolios effectively, especially when they need to balance security with yield.

The repayment for this deposit collection is scheduled for the month of Kartik in the year 2083. On the maturity date, Nepal Rastra Bank will return the principal amount along with the accrued interest to the participating institutions. This fixed timeline gives commercial banks a predictable window for their investments.

Causes of High Excess Liquidity in Nepal

It is important to understand why the banking sector currently has so much excess cash. One of the main drivers is the steady inflow of remittances from Nepalese citizens working abroad. These funds are continuously deposited into local bank accounts, steadily increasing the total deposit base of commercial banks.

At the same time, the demand for new loans has remained relatively slow. Businesses and individual borrowers are taking a cautious approach due to prevailing economic conditions. When banks receive high deposits but experience low loan demand, they end up with large amounts of idle cash.

Without viable lending opportunities, banks look for safe alternatives to place their funds. The central bank’s deposit collection auctions provide a secure option, allowing banks to earn a reliable return on their excess liquidity rather than leaving it idle in non-interest-bearing accounts.

Broader Effects on the Economy

Absorbing one hundred billion rupees has direct benefits for the wider economy. First, it helps stabilize short-term interbank interest rates. When there is too much cash in the market, interbank rates can fall close to zero, which weakens the central bank’s control over monetary policy.

Second, this measure helps control inflation. When banks have too much idle cash, they might be tempted to lower lending standards or offer cheap loans for speculative activities. By absorbing this excess money, the central bank encourages more responsible lending practices and protects consumer purchasing power.

Ultimately, this systematic liquidity management reflects the central bank’s proactive role in supporting Nepal’s financial architecture. Through regular market interventions, Nepal Rastra Bank ensures that commercial banks remain stable, risks are minimized, and the national economy continues to grow on a solid foundation.

For More: NRB to Collect 100B Rupees in Deposits