KATHMANDU: Nepal Rastra Bank (NRB) is set to withdraw 40 billion rupees from the banking system due to excess liquidity in the market.

The bank has scheduled the bidding process for 21 days, starting at 2 pm today (Sunday).

Bids can range from a minimum of 100 million rupees to a maximum of 50 million rupees, up to the total amount specified.

The principal and interest payment will be determined by the Nepali date of Falgun 11, and the interest rate will be set through the bidding process.

According to the bank, bids for deposit collection will be accepted at the offered interest rates. Multiple bids may be submitted at different interest rates.

Only banks and financial institutions licensed by Nepal Rastra Bank in categories ‘A’, ‘B’, and ‘C’ will be eligible to participate.

Bids must specify the amount to be deposited and the interest rate (up to four decimal places).

When allocating the deposit collection amount, priority will be given to bids with the lowest interest rates, with amounts distributed gradually until the total desired amount is met.

If the total bid amount with the same interest rate exceeds the available amount, it will be distributed on a pro-rata basis.

The committee reserves the right to accept or reject the entire or partial bid for the amount being offered.

Once the bid is accepted, the bank will debit the counterparty’s account and open a separate account to deposit the collected amount.

If the counterparty’s account has insufficient funds on the day the instrument is issued, the counterparty will be blacklisted and barred from participating in future bids.

The collected deposit amount, along with interest, will be deposited in the relevant bank’s account at the bank on the specified payment date.