With this, the National Bank has issued bonds for the sixth time in about a week.
What you should know
The Nepal Rastra Bank is set to withdraw Rs 10 billion from the market today through bonds. The bank has already withdrawn Rs 120 billion since Monday last week.
To date, the National Bank has withdrawn Rs 130 billion through this instrument. With this, the National Bank has issued a National Bank bond for the sixth time in about a week.
Last week, on Monday, the National Bank withdrew Rs 25 billion through bonds for the first time in 10 years. Since then, it has withdrawn Rs 100 billion through three more bonds at the rate of Rs 25/25 billion. Similarly, the National Bank, which had withdrawn Rs 20 billion through bonds on Wednesday, has issued a National Bank bond to withdraw Rs 10 billion on Thursday.
Bids for Rs 37.5 billion have been received for the bond issued on Wednesday, out of the 20 billion applications invited. 17 banks and financial institutions had made 54 bids. The average interest rate on the bond has been fixed at 2.72 percent.
Since there is no immediate possibility of liquidity in the market decreasing, the NRB is withdrawing money for a long period (one year). At this stage, the NRB is preparing to withdraw 200 billion rupees from the market through bonds, a source in the NRB has said.
The interest rate of the bond will be determined through bidding and the interest will be paid every 6 months. The principal of the bond will be paid after one year. Only banks and financial institutions (counterparties) of category 'A', 'B' and 'C' that have been granted permission by the NRB can purchase the bond.
Investors can bid on the bond by dividing it by a minimum of 50 million and a maximum of 50 million rupees, leaving the remainder. This bond can be used as collateral to take out loans in banks and other banks and financial institutions.
