Nepal Rastra Bank to mop additional Rs 40 billion for liquidity management

KATHMANDU: In a continued effort to manage liquidity in the banking system, the Nepal Rastra Bank (NRB) has announced its plan to mop up an additional Rs 40 billion from the market. This operation will be conducted through a bidding process, with banks and financial institutions required to submit their proposals by 3 PM on Wednesday.

The liquidity absorption will be for a period of 21 days, during which the central bank aims to stabilize the monetary system by removing excess liquidity that could otherwise destabilize the economy.

This move comes amid growing concerns over liquidity management, as an earlier mop-up of Rs 121 billion conducted by NRB has yet to mature. The central bank’s continuous efforts in this area highlight its strategic approach to maintaining financial stability and addressing liquidity pressures within Nepal’s banking sector.

Experts believe that these mop-up operations are critical in maintaining inflation control, ensuring smooth credit flows, and managing interest rate fluctuations, especially as Nepal continues to recover from the economic impacts of global uncertainties.

This liquidity management effort is part of NRB’s broader monetary policy, designed to keep the financial system in check and ensure that commercial banks and financial institutions do not face undue liquidity strain, ultimately contributing to a stable investment environment.