Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB) has decided to allow commercial banks to invest in foreign government bonds. This provision has been announced through the Monetary Policy of the fiscal year 2083/84.

According to the Nepal Rastra Bank, commercial banks will be encouraged to invest in foreign government bonds to make the additional liquidity management in the banking system effective through the purchase of foreign currency. In addition, a policy provision for ‘sterilized intervention’ will also be implemented at the time of purchase of foreign currency.

“In order to facilitate liquidity flow management through the purchase of foreign currency, commercial banks will be encouraged to invest in foreign government bonds and a policy arrangement will be made for sterilized intervention at the time of foreign currency purchase,” the monetary policy reads. ”

This arrangement is expected to help manage excess liquidity in the banking system. Banks will have the opportunity to invest in foreign government bonds that are considered safe instead of restricting their investment to domestic countries.