Kathmandu. More liquidity in the financial system, short-term interest rates are seen to be increasing. Since the banks are able to sell goods at interest rates, the interest rate has increased when they invest in deposit collection rather than permanent deposit facilities.

Banks and financial institutions get 3 percent interest rate when they keep money in the central bank through permanent deposit facility. However, when keeping money through deposit collection, the interest rate is determined on the basis of quotations, so it is more attractive than permanent deposits.

Deposit collection is also used to maintain the lower limit of the interest rate corridor or to keep the short-term interest rate slightly above it. That's why, Bhandari said, even when the minimum interest rate demanded by the banks is more than 3 percent, they took deposits.

If there is more liquidity in the financial system, the central bank will not allow the interbank rate to go below the lower limit of the interest rate corridor. For that purpose, the central bank is currently drawing liquidity through deposit collection and permanent deposit facility.

On Wednesday, the banks and financial institutions that held permanent deposits of Rs 25.70 billion have given Rs 40 billion to the central bank through deposit collection on Thursday. Earlier, after the deposits taken on June 11 and 18 matured on Thursday, the central bank withdrew 40 billion. In addition to that, after the fixed deposits taken last Sunday also matured, the deposits were collected after there was more liquidity in the system.

 While giving money to the central bank through deposit collection, the bank financial institutions have increased the interest rate. The interest rate demanded by banks and financial institutions for collecting deposits on Thursday is the highest in the last 4 months. Before this, banks had demanded 3 percent interest rate for deposit collection on 23rd Jan 2080. After that, banks and financial institutions have demanded the same rate on Thursday (today) as well. The central bank has also taken deposits at that rate.

 The Central Bank had called for the collection of deposits worth 40 billion rupees for a period of 14 days. For that, banks and financial institutions had applied for 44 billion 10 million. However, the central bank has taken the deposits of institutions that offer interest up to a minimum of 3 and a maximum of 3.1491 percent. The Central Bank said that the average interest rate of deposit collection on Thursday remained at 3.0561 percent.