Central bank to withdraw 20 billion rupees to manage excess cash

January 7, 2026, 05:05:37 PM |

KATHMANDU: The Nepal Rastra Bank (NRB) has decided to issue a new debt instrument worth Rs 20 billion today. This move is designed to pull extra cash out of the banking system. For the past three years, banks in Nepal have had too much “liquidity,” which means they have a lot of money sitting in their vaults that isn’t being borrowed by the public.

To help manage this, the central bank is issuing a one-year bond called “NRB Bond 2083.” This is the fifth time in a very short period that the central bank has taken this step. They previously issued similar bonds on several dates in late December and early January to keep the economy stable.

How the Auction Works

Commercial banks, development banks, and finance companies are all allowed to participate in the bidding process. The smallest amount a bank can bid for is 50 million rupees. The interest rate for this bond will be decided through a competitive bidding system.

If a bank wins a bid but doesn’t have enough money in its account on the day the bond is issued, it will face a penalty. The central bank stated that such banks would have their bids cancelled, pay a fine, and be banned from participating in similar auctions for six months.

Why this is Happening?

The banking system is currently flooded with money, but people and businesses are not taking out many loans. In just the first four months of the current fiscal year, over 1.1 trillion rupees in loanable funds have piled up in banks.

Because demand for loans is so low, the central bank has to step in to “mop up” the extra cash. This helps prevent interest rates from falling too low and keeps the financial market balanced. The money of the central bank collects will be paid back with interest in one year, on January 7, 2027.

Would you like me to explain how this process of “withdrawing liquidity” affects the interest rates on your personal savings account?

Fiscal Nepal |

Wednesday January 7, 2026, 05:05:37 PM |