KATHMANDU. The Nepal Rastra Bank (NRB) has issued a second circular to implement the provisions announced in the monetary policy for the fiscal year 2081/82 BS. The NRB has removed the Rs. 20 Crores limit on margin lending for promoter shares. In a circular issued on Friday to implement the monetary policy, the central bank has set a maximum limit of Rs 15 crore for margin loans secured by shares for a single customer from any or all licensed institutions. However, this limit will not apply to institutional investors established primarily for investing in the stock market. Previously, a limit of Rs. 20 Crores was set for institutional investors.

Nepal Rastra Bank has abolished the limit of Rs 20 crore for institutional loans on share mortgages. Governor Mahaprasad Adhikari announced the monetary policy for the current financial year and said that the loan limit for the institutional sector has been canceled while keeping the personal loan in the share loan.

Financing up to 65% of the average value of pledged shares.  Loan limit up to Rs. 20.00 crores.

The end of August of the current financial year, banks and financial institutions have provided nearly 1 billion loans in share securities. According to the data released recently by the Central Bank, until August, banks and financial institutions have provided loans worth 99.76 billion 56 lakh rupees as share securities.

July and August 2024, banks and financial institutions seem to have provided 9 billion 67 billion 24 lakh rupees in share mortgage loans. Compared to the end of last June, the share mortgage loan flow has increased by 10.7 percent till the end of August. Until the end of last June, banks and financial institutions had provided loans worth 90 billion 932 million rupees.

The central bank  NRB took some flexible policy through the monetary policy of the current financial year. Because of this, share loans seem to be increasing. Rastra Bank through current monetary policy abolished the limit of 200 million for margin nature share mortgage loans of institutional investors. Also, after the National Bank has reduced the risk burden of share securities, investors have been encouraged to take loans of this nature. At this time, because the stock market is on the rise, margin loans have also increased.

Large borrowings in margin nature loans have increased the most. According to the details of the Central Bank, those who took more than 1 crore loans have increased by 17.9 percent. By August of the current year, loans of more than 1 crore rupees have flowed to the amount of 65 billion 93 crore 14 lakh rupees. In the last 2 months, it seems that more than 10 billion of such loans have flowed above 10 million.

After that, the highest number of borrowers are between 5 million to 10 million. Share mortgage loans of this size also increased by 3.2 percent. Till August, 12.81 billion 98 million loans have been disbursed in this range. However, the number of borrowers taking margin loans of less than 25 lakhs and between 25 lakhs to 50 lakhs has decreased. Those taking loans between 2.5 million and 5 million rupees decreased by 3 percent and those taking less than 2.5 million rupees decreased by 3.9 percent.