First Business News Portal in English from Nepal
KATHMANDU: Though demand for loan is gradually increasing in the recent months, country’s financial system still has Rs 114 billion liquidity as of Wednesday (December 9).
This excess liquidity excludes the cash reserve ratio (CRR) that banks should maintain. CRR refers to the the portion of the cash deposits that banks are required to park in the central bank vault.
The financial system had almost Rs 170 billion excess liquidity two weeks before. Though available figures show that liquidity in the financial system is coming down, the falling liquidity is not due to excessive disbursement/demand for loan. Rather, the liquidity seems being eased after the Nepal Rastra Bank (NRB) started absorbing money fro the market to manage the liquidity issue.
The central bank has already absorbed Rs 71 billion from the market in the last two weeks. The amount will return back to the financial system within next wo weeks.
NRB has claimed that different tools are being used to manage liquidity in the market.
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