Nepal Rastra Bank (NRB) is issuing a repurchase agreement (repo) worth Rs 30 billion. The central bank is today issuing the repo for seven days after a shortage of investment capital is seen in the banks and financial system.
NRB issues short-term repos if there is a liquidity shortage in the banking system. Commercial banks, development banks, and financial institutions can buy the repo through tender. The repo will mature on September 30.
Before this, NRB had provided the money through a repo of Rs 20 billion for a period of seven days on September 2, Rs 30 billion for a period of 14 days on September 9, and Rs 20 billion for a period of one week on September 16.
Banks and financial institutions use the repo, inter-bank lending, and the Standing Liquidity Facility (SLF) in case of a liquidity crunch. It is found that banks and financial institutions are not getting inter-bank lending due to the shortage of liquidity. They have been regularly taking SLF.
NRB data shows that the banks and financial institutions have raised Rs 409 billion 560 million through SLF as of Wednesday in the current fiscal year starting mid-July.
BFIs raised Rs 27.24 billion through SLF 12 times on Wednesday alone, as per the NRB data.