KATHMANDU, July 9

Nepal Rastra Bank (NRB) is once again using a money market instrument called ‘term deposit’ to mop up banking sector’s excess liquidity, which stands at around Rs 110 billion.

The central monetary authority will deploy this instrument on Sunday to absorb Rs 10 billion from the banks and financial institutions (BFIs).

“We are using this tool as liquidity is rapidly building up in the banking sector because of greater inflow of workers’ remittance,” said Nara Bahadur Thapa, executive director of Public Debt Management Department at NRB. BFIs are currently sitting on top of excess liquidity of Rs 109.81 billion, as per NRB.

The ‘term deposit’ instrument, with a maturity period of three months, was introduced for the first time earlier this fiscal year.

Since its introduction, NRB has used this tool 13 times to mop up Rs 105 billion from the banking sector.