Exclusive study of Marginal Loan as per Q4 reports; 51 Arba yet to be dispersed for investment
Wed, Aug 22, 2018 3:03 PM on Exclusive, Financial Analysis, Economy, Latest,
~Rishab Agrawal
Commercial Banks provide different types of loans to its customers. One such type of loan is marginal loan. Marginal loan is the loan provided by banks after collateralizing shares and accordingly the funds are lent. These funds can only be used to invest in securities. Generally, this type of loan is taken by investors who actively monitor and manage their investment.
We have complied the data regarding the amount of marginal loan provided by each bank and its exposure in the total loan and core capital of the bank. All of the figures have been taken from unaudited fourth quarter reports published of FY 2074/75 by the banks and the latest Basel reports available on the banks’ respective websites. They give the following picture:
S. No. |
Symbol |
Name |
Total Loan ('000) |
Marginal Loan ('000) |
% of Total Loan |
Core Capital (CC) in NRs |
ML % of CC |
Excess Lending Capacity in NRs |
1 |
CZBIL |
Citizens Bank International Limited |
57,954,996 |
2,817,552 |
4.86% |
10,076,328,992 |
27.96% |
(298,469,752) |
2 |
PRVU |
Prabhu Bank Limited |
75,980,566 |
2,388,587 |
3.14% |
10,844,698,207 |
22.03% |
322,587,552 |
3 |
NICA |
NIC Asia Bank Limited |
120,666,392 |
1,931,429 |
1.60% |
9,766,340,000 |
19.78% |
510,156,000 |
4 |
PCBL |
Prime Commercial Bank Limited |
69,709,602 |
1,978,742 |
2.84% |
10,567,432,285 |
18.72% |
663,116,071 |
5 |
SRBL |
Sunrise Bank Limited |
60,545,841 |
1,916,943 |
3.17% |
10,475,710,000 |
18.30% |
701,984,500 |
6 |
SBL |
Siddhartha Bank Limited |
84,760,513 |
2,010,477 |
2.37% |
12,080,320,000 |
16.64% |
1,009,603,000 |
7 |
GBIME |
Global IME Bank Limited |
93,373,418 |
1,879,420 |
2.01% |
11,840,940,329 |
15.87% |
1,080,815,082 |
8 |
RBB |
Rastriya Banijya Bank |
120,872,213 |
2,016,360 |
1.67% |
12,741,643,573 |
15.82% |
1,169,050,893 |
9 |
CCBL |
Century Commercial Bank Limited |
54,988,508 |
1,267,869 |
2.31% |
9,463,864,326 |
13.40% |
1,098,097,082 |
10 |
NCCB |
Nepal Credit & Commercial Bank Limited |
55,013,229 |
918,216 |
1.67% |
6,859,707,000 |
13.39% |
796,710,750 |
11 |
NABIL |
Nabil Bank Limited |
112,398,048 |
2,232,317 |
1.99% |
17,259,602,809 |
12.93% |
2,082,583,702 |
12 |
LBL |
Laxmi Bank Limited |
61,996,940 |
1,308,064 |
2.11% |
10,608,993,000 |
12.33% |
1,344,184,250 |
13 |
NBL |
Nepal Bank Limited |
79,632,495 |
1,784,480 |
2.24% |
14,654,210,000 |
12.18% |
1,879,072,500 |
14 |
KBL |
Kumari Bank Limited |
62,740,973 |
1,010,990 |
1.61% |
8,574,223,256 |
11.79% |
1,132,565,814 |
15 |
HBL |
Himalayan Bank Limited |
86,846,646 |
1,344,048 |
1.55% |
12,960,462,439 |
10.37% |
1,896,067,610 |
16 |
CBL |
Civil Bank Limited |
39,460,979 |
773,878 |
1.96% |
9,211,062,440 |
8.40% |
1,528,887,610 |
17 |
EBL |
Everest Bank Limited |
93,991,587 |
1,107,340 |
1.18% |
14,151,382,000 |
7.82% |
2,430,505,500 |
18 |
MEGA |
Mega Bank Nepal Limited |
56,403,368 |
710,481 |
1.26% |
12,002,000,000 |
5.92% |
2,290,019,000 |
19 |
BOKL |
Bank of Kathmandu Limited |
69,463,294 |
654,490 |
0.94% |
11,150,991,699 |
5.87% |
2,133,257,925 |
20 |
NIB |
Nepal Investment Bank Limited |
122,388,439 |
1,222,742 |
1.00% |
20,940,466,029 |
5.84% |
4,012,374,507 |
21 |
JBNL |
Janata Bank Nepal Limited |
54,388,926 |
481,684 |
0.89% |
9,505,600,000 |
5.07% |
1,894,716,000 |
22 |
NMB |
NMB Bank Limited |
75,645,917 |
417,471 |
0.55% |
11,741,729,816 |
3.56% |
2,517,961,454 |
23 |
SANIMA |
Sanima Bank Limited |
68,663,692 |
325,789 |
0.47% |
9,535,361,259 |
3.42% |
2,058,051,315 |
24 |
NBB |
Nepal Bangladesh Bank Limited |
42,400,601 |
289,840 |
0.68% |
11,449,654,000 |
2.53% |
2,572,573,500 |
25 |
MBL |
Machhapuchchhre Bank Limited |
64,365,666 |
228,728 |
0.36% |
10,107,770,000 |
2.26% |
2,298,214,500 |
26 |
SCB |
Standard Chartered Bank Nepal Limited |
46,148,405 |
- |
0.00% |
12,628,976,311 |
0.00% |
3,157,244,078 |
27 |
SBI |
Nepal SBI Bank Limited |
74,502,222 |
- |
0.00% |
11,786,846,000 |
0.00% |
2,946,711,500 |
28 |
ADBL |
Agricultural Development Bank Limited |
96,490,498 |
- |
0.00% |
23,133,640,000 |
0.00% |
5,783,410,000 |
As per the recently released NRB directive, commercial banks can lend up to 25% of their core capital as marginal type loan, with effect from new fiscal year 75/76.
As we can see, Citizens International Bank, Prabhu Bank and NIC Asia are lending 27.96%, 22.03% and 19.78% of its core capital as marginal type loan while some banks like Standard Chartered, Nepal SBI and Agricultural Development Bank haven’t given out any marginal type loan from their total loan. As per the new directive CZBIL either has to reduce the amount given as marginal loan or increase its core capital to meet the terms provided by NRB.
In terms of total loan provided, Nepal Investment Bank Limited stands at the top after lending Rs.122.38 Arba while only 1% of this amounts makes up the marginal loan lent. Second in this list is Rastriya Banijya Bank with lending of Rs.120.87 Arba and only 1.67% of this amount consist of marginal loan. NIC Asia bank stands as the third largest lender after lending Rs.120.66 Arba, 1.6% of which is marginal loan.
In terms of marginal type loan provided, Citizens Bank tops the list after providing Rs.2.81 Arba as marginal loan followed by Prabhu Bank and Nabil Bank whose marginal loan amount to Rs.2.38 Arba and Rs.2.23 Arba respectively. These figures make up 4.86%, 3.14% and 1.99% of their respective total loans.
If we look at the averages derived from the data above, the following can be inferred:
Average Marginal Lending in NRs |
1,179,212,000 |
Average Marginal Loan as % of Total Loan |
1.59% |
Average Marginal Loan as % of Core Capital |
10.44% |
Total Excess Lending Capacity in NRs |
51,012,051,943 |
The average Marginal Lending of the industry stands at Rs.1.18 Arba and we can see equal division of number of banks falling above and below the average marginal lending amount. A similar division can be seen if average marginal loan as % of core capital is considered. The average stands at only 10.44%. Similarly, 15 banks have above average marginal lending as % of total lending which stands at 1.59%.
The total of excess lending capacity, after considering the adjustment of Citizens Banks, stands at Rs.51 Arba. This indicates that a huge capital that could flow in the secondary market as investment, is lying with commercial banks as undistributed loan or loan distributed for other purposes. The reason for this can be rigidity of commercial banks towards this type of loan or insufficient demand from investors for the said loan. Whatever be the reason, capital that could be invested in secondary market is flowing to other sectors while the growth of capital markets is hampered.