Good news for the market: NRB increases limit on margin call

ShareSansar, July 15:

Nepal Rastra Bank has increased the limit on margin call through its Unified Directives-2071.

As per the new directive, there will be no need for a margin call up to 1.5 times of the security coverage. This move is expected to have a positive impact on the stock market.

The Development Bankers’ Association had been lobby with the central bank to increase the limit on margin call, stating that it was not appropriate to make margin call when the price of securities is enough to cover 1.5 times of the loan issued against it – even when the price of scrip falls to a certain extent.

With the new provision the share investors will find it easier to get more effective and attractive loan package as there is an existing legal provision which stipulates that margin call is not mandatory even if the price of scrip falls by up to 10 percent.

Now the BFIs can issue a margin call to a borrower to meet the required margin within seven days only if the price of scrip goes beyond 1.5 times of the security coverage.

Promoters can fight for public directors, too

Meanwhile, the central bank has become more flexible to promoter shareholders of a listed company by allowing the promoter/ promoter group to file candidacy for public director as well.

This provision comes at a time when the BFIs have been asked to covert more of their promoter shares to ordinary ones.