Nepal Rastra Bank (NRB), the central bank, is set to withdraw Rs 18 billion in liquidity from the market today through a one-month deposit collection instrument. The auction for this amount, open to licensed banks and financial institutions, will take place online at 3:00 PM today, Friday, October 2, 2026.
The central bank will repay the principal and interest for this deposit collection on Kartik 13 (BS), October 30, 2026. This move is part of NRB’s ongoing efforts to manage excess liquidity within the banking system.
Managing Excess Liquidity
The banking system has been experiencing an extraordinary surplus of investable funds, or liquidity, primarily due to an increase in deposits that has not been matched by a corresponding rise in loan disbursements. This situation can put undue pressure on market interest rates, which the NRB aims to regulate through such interventions.
According to data up to October 1, 2026, the average base rate of commercial banks has decreased. This indicates ample liquidity in the market and relatively weak demand for credit. As of Shrawan 20 (BS), bank deposits had reached Rs 6,442 billion, while loan investments stood at only Rs 5,145 billion, highlighting a liquidity surplus exceeding Rs 700 billion.
NRB has consistently used deposit collection instruments to manage liquidity. The central bank had previously withdrawn over Rs 700 billion from the market through similar instruments, which are yet to mature.
Recent Interventions
In recent weeks, Nepal Rastra Bank has made several other interventions to manage liquidity. On September 28, 2026, it invited bids for a one-month deposit collection of Rs 30 billion. Similarly, on September 30, 2026, the central bank issued a notice for a one-month deposit collection amounting to Rs 20 billion.
Today’s Auction and Future Outlook
The auction for today’s Rs 18 billion deposit collection will determine the interest rate for the instrument. However, the results of the bidding, including the accepted amount and the final interest rate, have not yet been made public. Furthermore, the specific maturity dates for the more than Rs 700 billion previously withdrawn by the central bank remain unclear.
Nepal Rastra Bank stated that it will continue to monitor the liquidity situation in the financial system and deploy monetary instruments as necessary to maintain stability.
