NRB collects Rs. 5 billion from several BFIs

Inflation

Kathmandu: Owing to excess liquidity in the financial sectors, the Nepal Rastra Bank (NRB) Sunday has collected Rs. 5 billion from banks and financial institutions (BFIs) for a period of 30 days through its deposit collection instruments.

The central bank has called for a bid from BFIs for deposit the collection through a public notice. The bidding opened today.

As per the notice, the BFIs that have been licensed as ‘A’, ‘B’ and ‘C’ grade institutions from the NRB can participate in the bidding.

The central bank often undertake such measures after some festivals such as Dashain when the financial market witnesses excess liquidity due to a high flow of cash in the market.

The deposit collection would be on the basis of interest rate auction and BFIs could propose both single and multiple interest rates in the bidding.

The central bank collected the deposit from BFIs according priority to the lowest interest rate bidders.

According to the NRB, after the maturity of the deposit, it would deposit principal and interest amount to the account of the correspondent BFIs at the central bank.

The deposit collection instrument will be matured on November 7, 2017.

The bidders could keep the certificates to the other banks and financial institutions except for NRB as collateral.