To recover Rs 100 billion from BFIs, NRB.

Nepal Rastra Bank (NRB) has made the decision to seize Rs 100 billion from banks and financial institutions (BFIs) today in response to rising bank liquidity. The NRB will use a bidding tool to collect this sum from the BFIs at 3 PM today.

This sum is scheduled to be collected by the NRB during a 21-day period. Participation will be available to finance firms, development banks, and commercial banks. In the bidding process, BFIs may suggest interest rates. A bank may also submit more than one bid for the interest rate. The proposals with the lowest interest rates will be given priority.

The NRB is bidding on deposits worth Rs 100 billion today, after a surge in bank liquidity. The NRB has been taking money out of banks in this way quite a bit lately.

Banks may bid with minimums of Rs 100 million and maximums of Rs 500 million, up to the total amount requested, during the bidding process. Deposits deposited with the NRB may be pledged by banks as security for loans to other banks and financial organizations.

The principal and interest payments are due to the banks on October 6, which is after 21 days. Money has amassed in the banks as a result of the present lack of demand for loans. It seems like a sensible way for banks to handle their liquidity in this case.

The total amount of money on deposit in banks and other financial institutions nationwide is currently Rs 6.496 trillion. There has been a loan disbursement of Rs 5.29 trillion. For banks and other financial institutions, the credit-to-deposit ratio (or CD ratio) stands at 78.80% at the moment. Loans may be disbursed up to a ninety percent CD ratio.

Banks are still permitted to lend out Rs 727 billion, or 11.20 percent, of their deposits. However, this money has amassed in the banks due to the current low demand for loans. The government plans to sweep up Rs 100 billion in a single day to handle this.