Nepal Rastra Bank withdraws NPR 30 Billion to regulate liquidity

Nepal Rastra Bank (NRB) has initiated the withdrawal of NPR 30 billion in liquidity from the banking system. This decision follows an increase in liquidity within the financial sector and aims to regulate the money supply and stabilize the economy.

The central bank is using the “Bolkabol” bidding process, which will run for 21 days, to absorb the excess liquidity. Eligible participants, including commercial banks and financial institutions in categories ‘A,’ ‘B,’ and ‘C,’ can bid between NPR 10 crore (100 million) and NPR 50 crore (500 million). The interest rate will be determined through the bidding process.

The withdrawn amount, including principal and interest, will be repaid on Falgun 6, 2025 (February 18, 2025). Additionally, the liquidity collected can be used as collateral by the participating institutions.

This move is part of NRB’s broader strategy to manage liquidity, control inflation, and stabilize Nepal’s financial markets. By tightening liquidity, the central bank seeks to curb credit expansion and prevent inflationary pressures while ensuring financial stability in the banking system.