Kathmandu. Nepal Rastra Bank (NRB) has decided to invest around Rs 25 billion in fixed deposits of banks and financial institutions. The central bank has invited interest rate proposals from licensed banks and financial institutions to invest a total of Rs 24.83 billion.

The Finance Management Department of the Nepal Rastra Bank (NRB) has issued a notice urging the banks and financial institutions of class ‘A’, ‘B’ and ‘C’ to submit proposals for investment in fixed deposits. The amount will be kept in fixed deposits for 366 days from November 3, 2008.

The Rastra Bank has allocated the largest share of the amount for commercial banks. Rs 19.86 billion has been allocated for ‘A’ class commercial banks, Rs 3.72 billion for ‘B’ class national level development banks and Rs 1.24 billion for ‘C’ class national level finance companies.

Banks and financial institutions who wish to keep money in fixed deposits will have to submit a sealed form specifying the amount they want to take and the proposed interest rate. The application should be prepared in a password-protected PDF file and sent to the specified email address of the Rastra Bank.

According to the Rastra Bank, the application must be sent by 12 midnight on October 26. The password of the file related to the application will have to be sent to the same email by 12 midnight on October 26. Applications have to be sent only through official institutional email. Applications sent through personal emails such as Gmail, Yahoo and Hotmail will not be accepted.

Banks and financial institutions should meet various criteria to receive money in fixed deposits of the Rastra Bank. The institution should have completed at least two years of operation and should have maintained a minimum total capital fund with a buffer as prescribed by the Rastra Bank.

Similarly, the non-performing loan ratio should not be more than 8 percent and the net non-performing loan ratio should not be more than 3 percent. The net liquid assets ratio and the loan-deposit ratio should also be within the limits set by the Rastra Bank.

The concerned institution should have earned net profit in the last financial year and issued shares allotted to the general public. In addition, if the organization has taken prompt corrective action by the Rastra Bank or has been declared problematic, it should have completed at least six months since the release of such action or declaration.

Only banks and financial institutions that have fulfilled these conditions can submit a proposal to receive money in fixed deposits of the Rastra Bank.