NRB Liquidity Withdrawal: NPR 2.5 Billion Deposit Collection Auction Nepal
19th March 2025, Kathmandu
Nepal Rastra Bank (NRB) has announced plans to withdraw NPR 2.5 billion from the banking system today, Wednesday, 19 March. The central bank is using a deposit collection instrument to address the excess liquidity in the market. The auction for this withdrawal will take place at 3 PM.
NRB Liquidity Withdrawal
Banks and financial institutions can participate in the auction with a minimum bid of NPR 10 crore and a maximum of NPR 50 crore. The bidding will continue until the total amount is fully allocated. NRB has allowed both single and multiple interest-rate bidding options for this deposit collection.
Only Class ‘A’, ‘B’, and ‘C’ financial institutions are eligible to participate. The 21-day deposit instrument will mature on 9 April, with both principal and interest repayments due on the same day.
This move comes as the banking system continues to face excess liquidity due to low demand for loans. Banks and financial institutions are currently depositing funds with NRB at an average interest rate of around 3%.
NRB has been actively using deposit collection instruments to manage the surplus liquidity in the banking system. This latest withdrawal is part of its broader strategy to ensure financial stability and control inflationary pressures.
Excess liquidity has been a persistent issue in recent months, with banks struggling to find profitable lending opportunities. The central bank’s intervention aims to balance liquidity levels and support the overall health of the financial sector.
The banking system’s liquidity surplus has created challenges for financial institutions. With limited lending options, banks are finding it difficult to manage their surplus funds effectively.
NRB’s efforts to withdraw excess liquidity highlight its commitment to maintaining financial stability. By addressing the liquidity surplus, the central bank aims to create a balanced and healthy banking environment.
The deposit collection process is a key tool in NRB’s strategy to manage liquidity. It allows the central bank to withdraw excess funds from the market while providing banks with a secure investment option.
This latest withdrawal is expected to help stabilize the financial system and support economic growth. NRB’s proactive approach demonstrates its dedication to addressing challenges in the banking sector.
For more: NRB Liquidity Withdrawal
