KATHMANDU:  Nepal Rastra Bank (NRB) is set to withdraw Rs 40 billion from the banking system on Wednesday as excess liquidity persists.

The central bank will issue a 42-day deposit collection instrument through a bidding process, targeting liquidity and interest rate management.

Total bank deposits have crossed Rs 7.7 trillion, prompting repeated liquidity absorption through deposit instruments and standing deposit facilities.

Only licensed ‘A’, ‘B’, and ‘C’ class financial institutions can participate in the bidding, where interest rates will be determined competitively and allocation will prioritize the lowest bids.

The collected amount will mature on June 24, 2026, according to NRB. The minimum bid is Rs 1 billion, with amounts required to be in multiples of Rs 500 million.

NRB said it is using structural open market operations under its monetary policy framework to manage long-term excess liquidity and stabilize interest rates in the financial system.