September 5: There has been a general decline in the short-term interest rates of banks and financial institutions. Treasury bills and interbank rates have decreased as credit flow has not increased compared to deposit growth. The interest rate on the renewal of old treasury bills worth Rs 20.4 billion decreased on Monday.
Nepal Rastra Bank has called for auction bids to renew the treasury bills worth 20.4 billion with a maturity period of 28 days, T-bills worth Rs 5 billion for 91 days, T-bills worth Rs 6.4 billion for 91 days, T-bills worth Rs 7 billion for 182 days and T-bills worth Rs 2 billion for 364 days. Among them, the discount rate of all treasury bills has decreased compared to last week.
The average interest rate has been maintained at 6.1231 percent for T-bills with maturity period of 28 days, 6.1635 percent for 91 days T-bills, 6.4094 percent for 182 days T-bills and 6.4331 percent for 364 days T-bills.
Earlier, the interest rate of 28-day treasury bills issued on August 29 was 6.2084 percent. Similarly, the interest rate of 6.4393 percent was maintained for the 364-day treasury bills issued on August 22. The average interest rate of treasury bills with a maturity period of 128 days issued on August 15 was also maintained at 6.4876 percent.
Similarly, the inter-bank interest rate charged for transactions between banks has also decreased. According to Nepal Rastra Bank, the interbank interest rate on Sunday stood at 6.31 percent. On the previous day, the interbank interest rate was 6.35 percent.
Treasury bills and interbank interest rates are considered as short-term market interest rates. Increase in interest rates of T-bills and interbank interest rates indicate the liquidity problem in the banking system while the reduction in such interest rates hint at ease in liquidity situation.
On the first day of this week, deposits worth Rs 4 billion were added to the banking system. Deposits of commercial banks increased by Rs 4 billion to a total of Rs 4961 billion, while deposits of development banks and finance companies remained stable at Rs 673 billion.
Similarly, on Sunday, banks' loan disbursements also increased by Rs 2 billion and reached Rs 4882 billion. The loan-to-deposit ratio of banks has decreased to 83.62 percent.