KATHMANDU: The Nepal Rastra Bank is set to absorb Rs 35 billion from the banking system today to manage excess liquidity. The central bank will use a deposit collection tool to pull the funds for a period of two months.
Despite the accumulation of excess liquidity in banks and financial institutions, a low demand for credit has created challenges in liquidity management. According to data up to Sept. 1, banks and financial institutions had collected Rs 83.14 trillion in deposits, while loans extended during the same period stood at Rs 59.88 trillion. The credit-to-deposit (CD) ratio for these institutions was 71.41 percent during the review period.
Banks currently hold more than Rs 1.3 trillion in investable funds. To address the liquidity surplus, the central bank has been continuously absorbing funds through deposit collection auctions. Interested banks and financial institutions can submit their online applications until 3 p.m. on Thursday.
