Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Banks and financial institutions (BFIs) have started taking Standing Liquidity Facility (SLF) from Nepal Rastra Bank after the decrease in liquidity. SLF is a short-term loan taken by banks and financial institutions from the central bank of as collateral for government bonds. In the first months of the current fiscal year, banks have taken a large amount of short-term loans through SLF.
As the liquidity in the banking system started to increase, the order of banks to take SFF decreased. According to which, in January, banks and financial institutions took this facility only for one day.
At that time, it was analyzed that the order of taking SLF decreased after the liquidity situation eased. In the middle of the January (after the expiry of the maturity period of 50 billion rupees sent to the market by the National Bank through repo), there was a sudden decrease in liquidity. This is why the central bank sent 30 billion rupees to the market again through repo.
BFIs say that although this amount has improved the situation of lack of liquidity, it has not been easy. This is why banks and financial institutions have started taking short-term loans through SLF in recent days.
According to which banks and financial institutions took SLF on 13th, 14th, 15th and 17th of February. After that, BFIs took this facility once on 22nd and 23rd of February. However, the number of SLF withdrawals has decreased, according to the data of the central bank.
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