KATHMANDU: The Nepal Rastra Bank (NRB) absorbed Rs 120 billion from the banking system on Thursday (April 30) as part of its efforts to manage rising excess liquidity in the financial sector, where investable funds continue to accumulate.

The central bank carried out the operation through its 97-day deposit collection instrument under its monetary management framework.

A day earlier, on Wednesday (April 29), it had already withdrawn Rs 40 billion from the system, indicating continued surplus liquidity pressure.

According to the NRB, the repeated deposit collection reflects the persistence of excess funds in banks and financial institutions, prompting it to absorb liquidity through competitive bidding.

The allocation of funds will be based on the interest rates quoted by participating banks and financial institutions, with priority given to the lowest bids. The central bank will distribute the total amount sequentially until the announced target is fully met.

The interest rate for the instrument will be determined through the bidding process itself.

The central bank has also set bidding requirements, allowing a minimum bid of Rs 1 billion and additional bids in multiples of Rs 50 million, up to the total announced amount without any remainder.