Nepal, June 3 -- Nepal Rastra Bank (NRB) asserts that the Standing Deposit Facility (SDF) that it introduced as a monetary tool two years ago to preserve the interest rate corridor floor has been effective amid a freefall in interest rate in the country's banking system.

At a time when the country's central bank has been criticized for failing to manage excessive liquidity, the NRB's self-research has highlighted its effectiveness. For the past few years, Nepal's banks and financial institutions have been unable to utilize their excessive loanable funds, resulting in the freefall of interest rates.

The central bank launched the SDF system in the country's monetary system in February 2024, enabling banks and financial institutions to de...