NRB issues Rs 20 billion worth repo to ease liquidity pressure

KATHMANDU: The Nepal Rastra Bank (NRB) has issued two weeks repo worth Rs. 20 billion with a view to pumping liquidity in the bank and financial institutions (BFIs).

The repo announcement is being seen as an option to ease the stress of bankers due to the diminishing liquidity requirement in the BFIs. Two weeks earlier, BFIs had raised the rate of the interest on deposits to mope up liquidity in the banking system.

However, the NRB had intervened to anchor interest rates maintain the stability of the rate of interest so that potential borrowers would not get hit.

Meanwhile, the BFIs have been demanding more liquidity as the economic activities have been taking off recently. In this concern, the Executive Director of Nepal Bankers Association (NBA) Anil Sharma said that repo will help reduce the stress of the liquidity for the short-run need of the BFIs. He, however, said that such a measure would hardly address the impending demand for loans by the economy.

Currently, the NRB is injecting Rs. 20 billion in the BFIs. The two weeks repo will be matured on 25 November. According to the data of the Monetary Management Department, the NRB has significantly used the overnight repo facility to stabilize the financial market. The data showed that it has used Rs. 44.82 billion for repo since the beginning of the current fiscal year (FY).