The interest rate will be determined through bidding, and the principal and interest on the deposit collection instrument to be bid today will be paid on April 16, 2083, the Rastra Bank has informed.
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Nepal Rastra Bank is set to withdraw 50 billion rupees in deposits on Wednesday (today). The Rastra Bank is going to withdraw deposits through the deposit collection tool, BidBol, as excess liquidity persists.
The National Bank, which has been collecting deposits for a long period of 175 days since last week, is also going to collect long-term deposits today. The National Bank, which is engaged in long-term deposit management, is going to bid through the online purchase system.
The interest rate will be determined through bidding, and the principal and interest of the deposit collection instrument that will be bid today will be paid on Baisakh 16, 2083, the National Bank has informed.
The amount that can be bid will be up to the total call amount, dividing it by a minimum of Rs 100 million and a maximum of Rs 50 million. In particular, according to the central bank's open market transaction procedures, if there is excess liquidity of a long-term nature in the financial market, the Transaction Operations Committee has a provision to use the long-term deposit collection instrument for a maximum period of 6 months under the structural open market transaction on any day as needed.
The central bank has been using the deposit collection instrument repeatedly based on this arrangement. The central bank has been drawing liquidity through deposit collection tools and fixed deposit facilities to manage excess liquidity and interest rates in the financial system.
Only banks and financial institutions licensed by the National Bank of Nepal (NBN) in category ‘A’, ‘B’ and ‘C’ will be allowed to participate in Sunday’s auction. While allocating long-term deposit collection funds, the amount with the lowest bid will be allocated in order of priority according to the interest rates bid by the counterparties and the amount called up will be distributed gradually.
Banks are not planning to provide loans immediately. Therefore, the NNB has started using long-term tools. Currently, the total deposits in banks and financial institutions have reached 7.4 trillion 75 billion. According to the Nepal Rastra Bank, the trend of increasing deposits has been accelerating recently.
