Rastra Bank to withdraw Rs 60 billion in deposits today, banks flush with liquidity

Kathmandu. With excess liquidity persisting in banks, Nepal Rastra Bank is set to withdraw Rs 60 billion in deposits on Wednesday. In the absence of credit demand, it appears easier for banks to manage deposits.

The central bank has announced that the bidding will take place today at 3 PM. Commercial, development, and finance companies can participate. They must propose interest rates in the bidding. Banks can also submit multiple bids on interest rates. The one offering the lowest interest rate will be given priority.

In today's bidding, banks can propose up to the total called amount, with a minimum of Rs 100 million and a maximum that is a multiple of Rs 50 million. The deposits placed with the central bank can also be used as collateral in other banks and financial institutions, except this bank.

After 30 days, i.e., on Ashwin 30, banks will be paid the principal and interest. With low credit demand, money is currently piled up in banks. In such a situation, this appears to be an appropriate option for banks to manage liquidity.