Nepal Rastra Bank to Collect Additional NPR 40 Billion Deposit for 175 Days

Nepal Rastra Bank (NRB) has decided to once again collect long-term deposits from the market to manage excess liquidity in the financial system. As loan demand remains weak and investable funds continue to pile up within banks and financial institutions, the central bank has opted for longer-term deposit instruments to absorb liquidity.

For the past two years, credit demand in the market has remained sluggish, resulting in a steady accumulation of excess liquidity in the banking sector. While NRB previously used to collect short-term deposits, it has now begun accepting deposits for up to six months (175 days).

Last Wednesday, the central bank absorbed NPR 40 billion for 175 days, and today it plans to collect another NPR 40 billion for the same duration. Previously, NRB had been collecting deposits for periods ranging between 4 and 56 days.

Following the “Gen Z movement”, which caused widespread vandalism and arson in the private sector and led to weakened investor confidence, the private sector’s credit demand has dropped significantly. In response, NRB has taken the initiative to directly absorb market liquidity for an extended period.

So far in the current fiscal year, NRB has issued deposit collection instruments 23 times, mobilizing a total of NPR 844.65 billion, of which NPR 130 billion is yet to mature. Including the Standing Deposit Facility (SDF), total liquidity parked at the central bank stands at nearly NPR 800 billion.

According to NRB data, as of Ashoj (mid-October), banks and financial institutions have collected NPR 7.475 trillion in deposits and disbursed NPR 5.635 trillion in loans. The average Credit-to-Deposit (CD) ratio stands at 74.53%, meaning banks still have the capacity to lend an additional NPR 1.1 trillion under the regulatory ceiling of 90%.

Today’s liquidity absorption will be conducted through short-term liquidity management instruments for a period of 175 days, amounting to NPR 40 billion.

As per NRB, online bidding will open today from 3 PM, allowing interested banks and financial institutions to participate. Each participant must bid for a minimum of NPR 1 billion (10 crores) and can bid up to NPR 5 billion.

The principal and interest payments for this deposit will be made on Baisakh 13, 2083 (April 25, 2026). Licensed institutions in categories ‘A’, ‘B’, and ‘C’ are eligible to participate in the deposit auction.