The Nepal Rastra Bank is offering a repo (repurchase agreement) to inject Rs 10 billion in the banking system. The repo to be effective tomorrow and matured from October 28 is taking place in the wake of a liquidity shortage taking place. Financial institutions categorized ‘A’, ‘B’ and ‘C’ can bid for the repo.
Under the pretext of liquidity crunch, financial institutions lately increased interest rate up to double digit to attract deposits. However, the central bank on Tuesday intervened issuing a three-point direction for the financial institutions to slash interest rate. Earlier on October 6, the NRB floated a 14-day repo to inject Rs 20 billion in the banking system.