Nepal Rastra Bank mops additional Rs 40 billion for liquidity management

KATHMANDU: In a decisive move to manage liquidity in the banking system, the Nepal Rastra Bank (NRB) has mopped up an additional Rs 40 billion. This action is part of the central bank’s ongoing efforts to ensure financial stability and control excess liquidity in the market.

The NRB announced that it would mop Rs 40 billion for a period of 21 days using a bidding instrument. Banks and financial institutions were required to submit their proposals by 3 PM on Wednesday. This measure comes on the heels of a previous mop-up of Rs 37.6 billion by the central bank, which is still yet to mature.

Liquidity management has been a key focus for the NRB as it aims to maintain balance in the banking sector and avoid potential issues related to excessive liquidity. By mopping up these substantial amounts, the NRB intends to regulate the money supply and stabilize interest rates.

The decision to absorb additional funds from the banking system indicates the central bank’s proactive approach in addressing liquidity concerns. It also underscores the importance of maintaining a stable financial environment, particularly in times of economic uncertainty.

Banks and financial institutions are closely monitoring the NRB’s liquidity management strategies, as these actions have significant implications for lending rates and overall economic activity. The central bank’s efforts are expected to contribute to a more stable and predictable financial market.