Central bank to issue development bonds worth Rs 10 billion

KATHMANDU, JULY 5: The Nepal Rastra Bank (NRB), on behalf of the government, is issuing development bonds worth Rs 10 billion tomorrow. They carry a maturity period of 6 years and can be purchased by various organizations like banks and financial institutions (BFIs), insurance companies, etc in addition to the general public. 

 The interest rate of the debt instrument, to be paid on a half-yearly basis,  will be fixed during the course of the auction, according to the central bank. 

Of the total amount of development bonds, 85 percent will be floated through competitive bidding and the remaining 15 percent through non-competitive bidding. It is said that one can borrow loans from BFIs by pleading the bonds as collateral. 

The buyers can purchase bonds of a minimum of Rs 50,000 while a maximum of the amount is equivalent to the whole number obtained when bonds, not exceeding the total size, are divided by 50,000.

The NRB floats bonds and treasury bills every year to help the government raise funds to bridge resource deficits and cover various expenses.