Kathmandu: In response to the excess liquidity in the banking system, the Nepal Rastra Bank (NRB) will undertake a significant liquidity absorption operation on Sunday. The central bank has announced plans to withdraw Rs 100 billion through a bidding instrument.
The NRB’s move follows a previous operation on August 18, where it mopped Rs 100 billion through a similar bidding instrument, which is set to mature on Sunday. On the same day, the NRB will issue a new Rs 100 billion bidding instrument with a 21-day maturity period. This action comes after two earlier rounds of liquidity absorption on August 28 and September 4, where Rs 40 billion instruments were issued in each instance. Of these, Rs 22.2 billion was absorbed on August 28 and Rs 37.8 billion on September 4. These 21-day instruments are still pending maturity.
Since the start of the current fiscal year, the NRB has used deposit collection tools to absorb Rs 246.4 billion in liquidity, leaving Rs 158.6 billion still outstanding. With the Rs 100 billion maturing today, the NRB intends to continue its efforts to manage liquidity levels.
Additionally, under the Standing Deposit Facility (SDF), the NRB has absorbed Rs 5.675 trillion in liquidity, with Rs 120.15 billion remaining outstanding. For the current fiscal year, Rs 2.1215 trillion has been withdrawn from the system, with Rs 278.75 billion still outstanding, according to NRB reports.