NRB flows liquidity through Repo

KATHMANDU: Nepal Rastra Bank, the central bank of Nepal, has issued a re-purchase agreement (Repo) amounting to Rs 185 billion 500 million in the three months of the current fiscal year.

Though the central bank has issued liquidity of Rs 822 billion 680 million through routine measures, the banks and financial institutions are still facing liquidity crunch.

Undertaking quarterly review of the monetary policy of the current fiscal year, the central bank shared that it has processed liquidity of a total of Rs 60 billion, including Rs 31 billion 650 million through the instrument of deposit collection and Rs 28 billion 350 million through reverse repo.

With the liquidity crunch, the banks and financial institutions are not being able to issue loan to the customers. Some banks are avoiding the demand of the loan while some others are urging customers to come in to contact later.

The deposit that was maintained Rs 453 billion till the mid-November has dropped to Rs 446 billion up to 19 November. Similarly, loan investment has increased during the same period.

The bank is issuing the repo to prevent the shortage of investment capital in banks and financial systems. The central bank issues repo if there is a shortage of liquidity in the banking system.