Commercial Bank Reserves with NRB Drop by 14.2% Amid Tight Liquidity Conditions – Central Bank Data

Published on October 27, 2025

According to the latest data from the Nepal Rastra Bank (NRB) Mid-Month survey, commercial banks’ reserves held with NRB declined by 14.2% year-on-year, indicating tighter liquidity conditions in the banking system.

This drop in bank deposits at the central bank reflects NRB’s deliberate move to absorb excess liquidity, as foreign assets surged and surplus funds moved into the system. With bank deposits at NRB falling, commercial banks have less idle cash parked at the central bank, which tends to push them to deploy funds via lending or inter-bank operations — or to hold higher liquidity buffers elsewhere. This shift corresponds with NRB’s broader stance of controlling monetary expansion and keeping inflation and currency pressures in check.

The decline in NRB-held bank reserves comes amid other signals of tight liquidity: while savings deposits and broad money metrics show growth, the banking sector’s fixed deposits and call deposits show limited or even negative movements, and credit growth remains modest. Collectively, these data points illustrate that NRB is managing liquidity by reducing banks’ idle balances at the central bank, encouraging more efficient use of funds rather than letting them lie dormant.

Other Liabilities of Banks Rise 11.5% to Rs 1.84 Trillion as Reserves and Debentures Expand Sharply

Nepal’s banking sector recorded an 11.5% rise in other liabilities, totaling Rs 1.84 trillion, driven by surging reserves and increased debenture issuance. The expansion reflects enhanced capital strength, stable funding diversification, and robust financial resilience across the banking industry.

Private Sector Credit Expands 7.4% Year-on-Year to Rs 5.7 Trillion – Lending Momentum Continues in FY 2025/26

Private sector credit grew by 7.4% year-on-year to Rs 5.7 trillion, reflecting a steady lending recovery across both business and household segments. The rise in corporate and consumer credit underscores renewed confidence in Nepal’s economy and the central bank’s balanced liquidity management approach.

Private Sector Credit Grows 1.6% While Fixed Deposits Decline Slightly – NRB Banking Data FY 2025/26

Private sector credit in Nepal increased by 1.6%, supported by corporate and household lending, while fixed deposits fell by 0.5% amid changing deposit preferences. This balance reflects a stable yet cautious financial environment, where liquidity management and capital strengthening remain central to NRB’s monetary framework.

Bank Deposits in Nepal Rise Marginally by 0.5% to Rs 7.29 Trillion – NRB Mid-September 2025 Report

Nepal’s total bank deposits reached Rs 7.29 trillion in mid-September 2025, growing slightly by 0.5%. Savings deposits remained strong, while demand deposits declined and fixed deposits eased. This pattern indicates a steady liquidity position, with growing household savings and cautious credit activity under NRB’s tighter monetary oversight.

Commercial Bank Reserves with NRB Drop by 14.2% Amid Tight Liquidity Conditions – Central Bank Data

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