By Ajay Chhetri, Kathmandu, Dec. 2: Nepal Rastra Bank (NRB) has been injecting liquidity in the bank and financial institutions (BFIs) by repurchasing the Treasury bill. The NRB through a notice has called for the repurchase of the government bill worth Rs. 25 billion.

As the economic activities seem to have taken off, the quantity of excess liquidity has shrunk. The NRB had recorded Rs. 53.47 billion excess liquidity in August 2021, however, it declined to Rs. 15 billion on December 1, 2021.

The government is repurchasing the Treasury bill in the wake of shrinkage of liquidity in the bank and financial institutions in the current fiscal year (FY). The amount of the excess liquidity worth Rs. 53.47 billion in August 2021 has, however, been consistently declining as the economy is continuously signaling a cue of recovery.

According to the monetary policy review of the first quarter of the current FY, the aggregate average production and business have expanded by 74.7 per cent by mid- November this year relative to mid-march 2020. It had increased by 50.5 per cent in mid-December 2020.

Correspondingly, the expansion of credit has been finely tuning in parallel with the recovery of economic activities. The monetary policy review revealed that credit flow of BFIs to the private sector increased by 7.7 per cent to Rs. 4399.84 billion in the first quarter of the current FY. As the credit shot up, the quantity of liquidity has been persistently declining. The NRB data revealed the liquidity of Rs. 53.4 billion in August 2021 shrank to Rs. 15 billion by December 1, yesterday.