NRB to Withdraw Additional NPR 35 Billion in Bid to Boost Market Liquidity

In a strategic move to enhance market liquidity, Nepal Rastra Bank (NRB) has announced its intention to withdraw an additional NPR 35 billion from various financial institutions. The initiative is set to kick off on Wednesday, December 27, and will span 14 days, culminating on January 10, 2024.

Banking and financial entities keen on participating in this collection drive are invited to submit their applications. The operation’s terms and interest rates will be unveiled by NRB by the specified deadline. Institutions can apply for amounts ranging between 10 million to 50 million Nepali Rupees, with a prioritization focus on descending interest rates. The selection process will give precedence to the lowest bids.

Participation is exclusively open to banks and financial institutions falling under categories “A,” “B,” and “C” as classified by Nepal Rastra Bank. The application process mandates clear specifications, including desired amounts and interest rates (up to four decimal places), emphasizing lower rates and pro-rata distribution for similar bids.

NRB’s recent efforts to bolster market liquidity have demonstrated notable success. Within a month of initiating collections starting November 22 in the fiscal year 2080/81, the central bank accumulated an impressive NPR 197 billion and 25 million.

In the most recent development, within four sessions since December 17, NRB successfully withdrew NPR 70 billion. The initial invitation for applications totaled NPR 142.8 billion, with diverse banks submitting requests amounting to NPR 139.8 billion.

Despite concerns and reservations regarding investments, banks participating in the collection drive maintained remarkably low interest rates for deposits placed with the central bank. Rates ranged from 0.7048% to 2.9957%, showcasing the effectiveness of NRB’s measures to encourage liquidity without compromising on competitive interest rates.