14th September 2025, Kathmandu
Nepal Rastra Bank (NRB), the nation’s central bank, has announced a significant investment initiative to bolster the country’s financial sector and secure returns on its institutional funds.
NRB To Invest In FD
Nepal Rastra Bank (NRB), the nation’s central bank, has announced a significant investment initiative to bolster the country’s financial sector and secure returns on its institutional funds. NRB will place a total of NPR 1.2 billion in fixed deposits across a variety of financial institutions, including commercial banks, development banks, and finance companies. This move, disclosed on September 14, 2025 (Bhadra 29, 2082), is designed to manage the central bank’s grant and pension funds efficiently. Interested and eligible financial institutions have been invited to submit their applications by September 15, 2025 (Bhadra 30, 2082).
Strategic Allocation and Eligibility Criteria
The NPR 1.2 billion investment is strategically distributed to support and reinforce liquidity across different segments of Nepal’s banking system. The funds will be allocated as follows:
- Class “A” Commercial Banks: NPR 1.04 billion
- Class “B” Development Banks: NPR 195 million
- Class “C” Finance Companies: NPR 65 million
This diversified allocation not only helps NRB manage its risk by spreading investments but also provides a crucial injection of liquidity into smaller financial institutions. To be considered for these funds, financial institutions must adhere to strict eligibility criteria set by the central bank. These conditions are in place to ensure that only financially sound institutions can participate, thereby safeguarding NRB’s funds. Key requirements include maintaining the regulatory minimum total capital fund ratio and keeping non-performing loans (NPLs) below specific thresholds: gross NPLs must not exceed 8%, and net NPLs must remain under 3%.
Application Process and Market Impact
The application process is structured as a competitive bidding system. Banks and financial institutions interested in receiving a portion of the deposits must submit their proposals to NRB by the Bhadra 30 deadline. Each application must specify the desired deposit amount and the proposed interest rate. This approach encourages institutions to offer competitive interest rates while demonstrating their financial health and stability.
For the banking sector, this initiative represents a major opportunity to access a large and stable source of funding directly from the central bank. Securing a share of this NPR 1.2 billion can significantly strengthen a financial institution’s balance sheet, enhance its lending capacity, and improve liquidity management. This is particularly beneficial for commercial banks, which are set to receive the largest share, but also for development banks and finance companies, which often face greater challenges in securing large deposits. The intense competition for these funds is expected to drive institutions to offer competitive interest rates and maintain strong financial metrics to meet NRB’s stringent requirements.
Broader Economic Significance
NRB’s decision to channel funds into fixed deposits serves a dual purpose. First, it ensures the efficient management of its institutional funds by placing them in secure and productive investment channels to generate income. Second, it acts as a tool to support market liquidity and stability. By distributing funds across various classes of financial institutions, NRB reinforces confidence in the entire financial system at a time when prudent fund management and market stability are paramount. The move also signals NRB’s confidence in the sector’s resilience as it navigates economic recovery efforts and evolving credit demands. The institutions that successfully secure this investment will not only receive a financial boost but also a significant endorsement of their stability from Nepal’s top monetary authority.
For More: NRB To Invest In FD