Liquidity pulling from the banking system by Nepal Rastra Bank

Jun Sat 2023 04:51:18

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Liquidity pulling from the banking system by Nepal Rastra Bank

After more liquidity in the banking system, Nepal Rastra Bank is going to issue a reverse repo of Rs. The central bank is about to issue a financial instrument reverse repo for a period of 7 days. The National Bank of Liquidity Management is going to release repo for 7 days and absorb excess liquidity from the market. According to which, the maturity period of the repo, i.e. the time when the banks will get back the amount deposited in the repo, is fixed on June 17th.

Banks, development banks and finance companies are allowed to invest in the ongoing repo and it is stipulated that masters repurchase agreement with such institutions should be mandatory. To participate in the repo, banks will have to bid online by 3 pm on Sunday. The interest rate will be determined on a weighted average basis.

In order to control the increased money flow in the market, the National Bank is about to issue a reverse repo as investment has not been able to expand compared to deposits.