Nepal Rastra Bank liquidity withdrawal of Rs 70 billion 2026
5th June 2026, Kathmandu
Nepal Rastra Bank has officially announced that it will withdraw a staggering Rs 70 billion from the banking system.
Nepal Rastra Bank liquidity
This aggressive financial move comes as a direct response to continuously rising liquidity levels across the national financial sector.
The central bank will execute this massive capital extraction through its specialized deposit collection instrument. This strategy helps prevent market destabilization and ensures financial equilibrium.
Detailed Bidding and Auction Framework Scheduled for Today
The structural execution of this open market operation is moving at a rapid pace to address immediate market needs. According to the central bank, the formal competitive bidding process is scheduled to take place today at exactly 3 PM.
Licensed banking institutions will actively participate by offering competitive interest rates to secure their allocations. Nepal Rastra Bank has explicitly clarified that eligibility for this deposit auction is strictly restricted to the following specific regulatory categories:
- Licensed Class A commercial banks
- Licensed Class B development banks
- Licensed Class C finance companies
Outside institutions or general corporate entities are completely barred from participating in this specific open market mechanism.
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Mandatory Investment Rules and Multiple Bidding Conditions
The central monetary authority has established a strict set of investment guidelines that participating financial institutions must follow. The absolute minimum application threshold for any single institution is fixed at Rs 10 crore.
On the upper end, banks can bid for any amount within the total announced Rs 70 billion framework. Furthermore, any increment above the minimum limit must be executed in exact multiples of Rs 5 crore.
To maximize their chances of successful allocation, financial institutions are legally allowed to submit multiple bids at varying interest rate percentages. The central bank will evaluate the submissions and allocate the funds based on the most favorable interest rates offered by the competing banks.
Long Term Maturity Horizon and Core Objectives
This specific deposit collection instrument carries a fixed maturity tenure of exactly 77 days. The principal capital amount alongside all accumulated interest will be paid back to the participating banks in a convenient lump sum on Bhadra 5.
The primary objective of this temporary capital withdrawal is to manage excess liquidity before it causes systemic economic harm. By pulling these funds out of active circulation for 77 days, the central bank directly aims to maintain overall monetary stability, control rising inflationary pressure, and properly balance credit growth across the broader economy.
This active open market intervention highlights how the central bank uses short-term tools to stabilize the financial system and protect depositors nationwide.
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