Kathmandu. KATHMANDU: Nepal Rastra Bank (NRB), the central bank of Nepal, has decided to raise Rs 100 billion from the market through a deposit collection instrument with a period of 91 days to manage excess liquidity in the banking system.

According to a notice issued by the Monetary Management Department of the Rastra Bank, proposals have been invited from banks and financial institutions through online bidding. The bidding will take place till 3:00 pm on Wednesday and the deposit collection instruments will be issued on July 14.

The deposit collection instrument will be valid for 91 days. According to the NRB, the principal and interest will be paid to the concerned institution on September 2 based on the interest rate determined by the bidder.

Only the banks and financial institutions of grade ‘A’, ‘B’ and ‘C’ licensed by Nepal Rastra Bank are eligible to participate in the bidding. Bids can be placed from a minimum of Rs 10 crore to a maximum of Rs 5 crore. The same institution can also submit more than one bid at different interest rates.

Nepal Rastra Bank (NRB) has said that it will give first priority to the lowest interest rate while allocating the sum. The amount demanded at the same interest rate will be allocated on pro-rata basis if the amount demanded is more than the total issue amount. The Open Market Trading Steering Committee shall have the right to accept or reject all or partial bids.

The approved bid amount will be deducted from the account of the concerned bank and financial institution in the Rastra Bank. The notice also states that if there is not sufficient deposit in the account on the day of the issuance, such institutions will be blacklisted and barred from participating in the next bidding.