Kathmandu. Nepal Rastra Bank (NRB) has decided to collect deposits of Rs 20 billion for a period of one month.

Nepal Rastra Bank (NRB) has decided to collect the amount through a 1-month deposit collection instrument to manage excess liquidity in the market.

According to a notice made public by the Nepal Rastra Bank, the banks and financial institutions interested in participating in the bidding process should apply through the online bidding system (OBSS) of Nepal Rastra Bank till 3:00 pm today.

The interest rate for deposit collection will be determined through bidding. The principal and interest collected in this way will be paid on November 29, according to the Rastra Bank.

In the tender, the banks or financial institutions should mention the amount they want to keep as deposit and the interest rate demanded.

The lowest interest rate mentioned in the bid will be given first priority while allocating the amount called for deposit collection.

After that, the bids with higher interest rates will be allotted until the amount called for is completed.

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

The amount of 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 principal amount of the deposit will be deposited in the account of the concerned bank and financial institution with the interest fixed on the payment date.

According to the Rastra Bank, the deposit amount cannot be counted in the investment portfolio of the concerned bidder. However, it can be calculated in the mandatory liquidity ratio and statutory liquidity ratio (SLR) to be maintained as per the directives of the Nepal Rastra Bank.

Similarly, a provision has been made that the bidder cannot be paid back or made the premature payment before the expiry of the period of the deposit collection instrument. The Rastra Bank has been exploiting liquidity from the market from time to time through deposit collection instruments with the aim of managing excess liquidity available in the banking system.