Nepal Rastra Bank permits margin lending to BFIs! NEPSE likely to attain more volume of new investors

Nepal Rastra Bank (NRB) has provided permission to Banks and Financial Institutes (BFIs) to initiate margin lending. The discussion on provision to facilitate margin lending through BFIs was in discussion since a long period among NRB, SEBON and NEPSE.  Now, BFIs can provide margin loan through brokers. Commercial banks, Development banks and Financial Institutes can provide margin loans.

Earlier, NEPSE had also published a notice urging brokers to submit financial reports and projections in order to open new branches. All these measures are taken with the motive to include diversified investors from different regions of the country. 

However, broker representatives have been criticizing this step undertaken by authorities. Brokers perceive that it will be costly to open new branches as majority of investors can access stock market through online system. Similarly, some of the brokers also consider that providing banks license to brokering service will overlap their customer segment.

On the contrary, Investors' Pressure Group has demanded the presence of broker organizations in all 77 districts. 

Until 29th Magh, 41 locations had broker services among 13 districts outside Kathmandu valley. SEBON had further directed additional 8 brokers to provide services from 6 additional locations.