Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB), the central bank of Nepal, has decided to inject liquidity of Rs 85 billion into the banking system. The central bank is going to collect the amount from banks and financial institutions through the deposit collection tool on August 5.

According to the Nepal Rastra Bank, the auction will be held at 3:00 pm on Tuesday. Banks and financial institutions can participate in the bidding process to keep deposits in the Nepal Rastra Bank.

Interested banks and financial institutions can bid for a minimum of Rs 10 crore. After that, if you divide by Rs 50 million, you can bid up to a maximum of Rs 85 billion.

According to the central bank, the bidding for the deposit collection will be done on the basis of interest rate. Participating institutions can also make multiple bids at different interest rates. According to the notice issued by the Nepal Rastra Bank, only ‘A’, ‘B’ and ‘C’ class banks and financial institutions will be allowed to participate in the deposit collection equipment.

It will be a 90-day deposit collection tool. Under this, the principal and interest of the amount kept by the banks and financial institutions will be paid on November 3. In recent times, the amount of investment in the banking system has been increasing due to the high deposit growth compared to the loan expansion. The Nepal Rastra Bank (NRB) has been using deposit collection instruments for liquidity management after interbank interest rates came under pressure due to excess liquidity.

The central bank has been using such instruments to keep interest rates stable by drawing excess liquidity in the market and to make monetary management more effective.