KATHMANDU: The Central Bank, Nepal Rastra Bank (NRB), provided liquidity facility of nearly Rs 9,400 billion to national Banks and Financial Institutions (BFIs) in the country in the last fiscal year 2021/22.
The liquidity facility was extended to ensure liquidity in the national banking system.
As per the NRB data, it provided Rs 937.6 billion in liquidity facility, including Rs 9,170.10 billion in perpetual liquidity and Rs 206.38 billion in the overnight repo in the preceding fiscal.
BFIs in the country reeled under liquidity crisis through most of previous fiscal. The crisis went over the top when NRB canceled CCD ratio and implement CD ratio in the financial sector. Moreover, the demand of loans had skyrocketed as all sectors were trying to bounce back in the aftermath of the pandemic.
BFIs increased their loan investment resulting in a liquidity crisis. Their attempts to manage liquidity through deposit collection could not achieve the desired outcome.
As a result, the BFIs started to maintain their financial indicators by borrowing funds from the central bank. During a peak crisis moment, BFIs borrowed above Rs 100 billion funds from NRB in a single day.
Meanwhile, in the last month of the last fiscal, the borrowing declined as the government increased its expenditure.
The outstanding borrowing of the banks decreased to Rs 150 billion from the previous Rs 250 billion last month.
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