Nepal's central bank is currently holding Rs 1.35 trillion in surplus liquidity as the domestic financial sector faces a combination of increasing deposits and weak demand for loans. This accumulation of capital has exerted downward pressure on short-term interbank interest rates. To maintain financial stability and ensure these rates do not drop beneath the 2.75 percent threshold, the Nepal Rastra Bank has been actively mopping up excess funds. The regulatory body is utilizing various financial instruments, including deposit collection tools and bonds, to withdraw liquidity from the market. While the central bank possesses the capacity to both inject and absorb capital based on economic requirements, current market conditions have necessitated a consistent strategy of liquidity withdrawal to manage the prevailing surplus effectively.
Source : Online Khabar
Photo : Online Khabar
