KATHMANDU: Nepal Rastra Bank (NRB) has announced that it will issue a one-month deposit collection instrument worth Rs 60 billion through a competitive bidding process as part of its monetary management operations.

According to a notice published by the central bank on Friday, licensed banks and financial institutions wishing to participate must submit their bids through NRB’s Online Bidding System (OBSS) by 3:00 pm today.

The instrument will have a maturity period of 31 days, and the interest rate will be determined through the bidding process. Both principal and interest will be paid on Bhadra 22.
Institutions may place bids ranging from a minimum of Rs 100 million, increasing in multiples of Rs 100 million, up to the total amount announced for collection.

NRB said the allocation will begin with bids offering the lowest interest rate and continue in ascending order until the full amount is allocated. If bids quoting the same interest rate exceed the remaining amount available, the allocation will be made on a pro-rata basis.

Only Class ‘A’, ‘B’, and ‘C’ banks and financial institutions licensed by Nepal Rastra Bank are eligible to participate.
Bidders must specify both the amount they wish to deposit and the interest rate sought. Approved amounts will be debited from the respective institution’s account maintained with NRB and credited to a separate deposit collection account.

On the payment date, the collected deposit along with accrued interest will be credited back to the participating institution’s account at the central bank.
NRB clarified that the amount invested in this deposit collection instrument cannot be counted as part of the institution’s investment portfolio. However, it may be included for the purpose of maintaining the Statutory Liquidity Ratio (SLR) and other liquidity requirements as prescribed by the central bank. The central bank also stated that the collected deposits cannot be withdrawn or repaid before maturity and no premature payment facility will be available.