Kathmandu. Nepal Rastra Bank (NRB) is set to collect deposits of Rs 60 billion to manage excess liquidity in the banking system. The central bank is going to collect the amount through the deposit collection instrument for a period of 30 days.

According to a notice published by the Monetary Management Department of Nepal Rastra Bank, the banks and financial institutions interested in participating in the bidding process have to participate in the bidding through the Online Bidding System (OBSS) of Nepal Rastra Bank till 3:00 pm today.

The deposit will be collected at the interest rate determined by the bidding. The principal and interest of the deposits so collected will be paid on October 15. Bids can be made from a minimum of Rs 10 crore to a maximum of Rs 60 billion for the collection of deposits. The bid amount will be divided by Rs 10 crore.

While allocating the amount called for collection of deposits, the lowest interest rate mentioned in the bid will be given first priority. Thereafter, the bids with higher interest rates will be allocated to the total amount invited.

If the demand is more than the total amount issued at the same interest rate, then such bids will be allocated on the basis of pro-rata, according to the Rastra Bank. Only ‘A’, ‘B’ and ‘C’ class banks and financial institutions licensed by the Rastra Bank will be allowed to participate in the bidding for the collection of deposits.

The entity participating in the bidding will have to mention the amount they want to deposit and the interest rate they want to receive on it. The amount for the approved bid will be spent from the account of the concerned counterparty in the Nepal Rastra Bank. The amount will be deposited by opening a separate account for the collected deposits.

The deposit amount collected with the prescribed interest on the payment date of the deposit collection instrument (October 30) will be deposited in the account of the concerned bank and financial institution in the Nepal Rastra Bank. The deposit amount will not be allowed to be counted in the investment portfolio of the concerned bidder. However, the SLR and liquidity ratio to be maintained as per the directive of the Nepal Rastra Bank can be calculated.

Similarly, the NRB has stated that the collected deposit amount cannot be refunded or pre-mature payment to the bidder before the payment date.