'Investors can pledge demat shares for loans'

KATHMANDU:

Investors can now pledge dematerialised shares as collateral to obtain loans from banks and financial institutions. Nepal Rastra Bank today paved way for BFIs to extend loans on security of such shares. New provision is expected to create a positive impact on market as many investors who owned demat shares could not use them to obtain loans as BFIs were allowed to give credit only on the back of physical share certificates. Currently, investors can pawn shares and get loans equivalent to average share value of last 180 working days or existing market value of shares — whichever is lower. But if value of shares pledged declines by over 10 per cent or if their value is less than one-and-a-half times the loan , investors need to top up funds.

Source: THT