NRB renewing treasury bills

After the short-term  increase in interest rate, Nepal Rastra Bank has talked about renewing treasury bills worth 18 billion 25 crores on Monday.

As the treasury bill of 5 billion for the period of 28 days was spoken on Monday, only 5 billion has been renewed to the banks. According to the Bank, while the average discount rate is fixed at 9.5479 percent, the maximum is 10.9702 percent and the minimum is 8.9994 percent.

On Monday, when there was talk of renewing the treasury bill of 8 billion rupees for a period of 91 days, the average discount rate was 10.1420 percent, the maximum was 11.5002 percent and the minimum was 9.2499 percent.

Similarly, the bank had also brought a treasury bill worth 2.25 billion for 182 days for renewal. The government of Nepal has paid the treasury bill of 1.79 billion rupees. According to the central bank, the average discount rate is 10.0699 percent and the maximum is 10.3501 and the minimum is 9.0568 percent when only 46 crores are renewed.

Similarly, the Rashtra Bank itself has purchased 2.6 billion rupees for the renewal of 3 billion treasury bills for a period of 364 days. While renewing treasury bills worth 40 crores to banks, the discount rate has been maintained at an average of 10.0557 percent and a maximum of 10.4980 and a minimum of 8.9891 percent.

The short-term interest rate went up with the increase in policy rates including the bank rate from the current fiscal year's monetary policy. 

What are treasury bills? 

Treasury bills are short-term government bonds used to raise domestic debt with a maturity of one year or less. Treasury Bills are of 4 types on the basis of duration namely 28 days, 91 days, 182 days and 364 days. It is also taken as a basis for the regulator to measure where the short-term interest rate of the banking system is going.

Even after the National Bank opened the way for the banks to increase the deposit interest rate by increasing the bank rate in July, the banks that did not increase the interest rate increased the deposit interest rate for October. Finance Minister Janardhan Sharma formed a committee under the leadership of the Joint Secretary of the Ministry to reduce the deposit interest rate after it was widely criticized. The report of the committee has not been made public yet. But banks are under intense pressure to reduce interest rates.

The short-term interest rate has still reached double digits as the date for the banks to publish deposit interest rates for November is approaching.