Nepal’s Great Financial Shift: From Gold and Land to Capital Market

For generations, Nepali households followed a familiar path to financial security: gold for safety, land for status, and cooperatives for interest income. These were not just investment choices but cultural habits. Today, that formula is cracking. With the number of Demat accounts sky-rocketing from around 1.7 million in 2020 to over 6.9 million by 2025. More than 6.9 million Demat accounts have been opened, although the number of unique active investors is lower. This article explores the structural drivers behind this transformation, the risks involved, and what it means for Nepal’s economic future.

Why Traditional Savings Are Losing Their Power

 Gold: Safe but Inefficient

Gold remains culturally powerful in Nepal, bought for marriages, gifted to mothers and wives, and held as a crisis hedge. As of April 2026, gold is trading around NPR 300,000 per tola. However, gold investment in Nepal comes with practical constraints. Most investors are forced to buy jewellery, which includes making charges exceeding 20%. Nepal also lacks modern gold instruments like ETFs or paper gold markets, so gold stays physical and costly. Selling gold can be surprisingly difficult, and storage and security risks remain.

Land: Valuable but Illiquid

Land has traditionally provided security, social respect, and agricultural utility. The older generation believed shares were scams, not meant for “people like us.” But that paradigm is cracking. While urban areas like Kathmandu, Pokhara, and Butwal have seen significant price appreciation, with Kathmandu’s residential sector alone projected to contribute NPR 390 billion to market volume in 2025, land remains illiquid. Selling property takes months or even years, and for youth and middle-income families, land is increasingly unaffordable.

Cooperatives: High Return but High Trust Crisis

Cooperatives attracted savers by offering 12–18% interest compared to banks’ 5–8%. But the sector is now in crisis. Over NPR 9 billion have been embezzled from cooperatives in Gandaki Province alone, with investigations and legal actions underway against 19 cooperatives. The Surya Darshan Cooperative scandal involves Rastriya Swatantra Party Chairman Rabi Lamichhane. Illegal loans from cooperatives have exceeded Rs 53 billion, while investment-linked fraud has accounted for nearly Rs 3 billion. Yet cooperatives still grow because many citizens have no other easy financial channel.

Unsecured Loans and Informal Lending in Villages

In rural areas, a parallel financial system operates through moneylenders offering unsecured loans at exorbitant interest rates, as high as 36% per year. This informal system drains household wealth and perpetuates cycles of debt.

The Digital Awakening: Why Nepalis Are Turning to Stocks

Explosive Growth in Demat Accounts

The strongest proof of the shift is the explosive rise of Demat accounts. According to CDSC data, Demat accounts grew from around 1.7 million in 2020 to more than 6.9 million by the end of fiscal year 2024/25. As of mid-February 2025, Demat accounts had reached 6.55 million, accounting for 22.44% of the country’s total population. By mid-2025, active Mero Share users had climbed to 5.59 million. In a single week in April 2026, 110,514 new Demat accounts were opened. This is not a normal increase; it represents a national behavioural shift.

 IPO Fever: Nepal’s “First Investment Experience”

Applying for an IPO in Nepal has become less of a financial decision and more of a national habit. The Shikhar Power IPO saw 2.68 million applicants for an issue oversubscribed by more than 14 times. Another report put the figure at 2.76 million applicants, with oversubscription reaching 16.68 times. Most successful applicants received just 10 shares. Yet this tiny taste of ownership creates something powerful: a psychological entry point. People who never imagined owning shares suddenly see a message flashing: “You have been allotted 10 shares.” For many, that IPO allotment is their first exposure to the capital market.

The Rise of Mutual Funds and SIPs

Perhaps the most important sign that Nepal is not just producing traders but also long-term investors is the growth of mutual funds and Systematic Investment Plans (SIPs). As of December 2025, Nepal had 53 mutual funds (41 closed-end and 12 open-end) with a total fund size exceeding NPR 61 billion. Mutual fund investments in securities amount to Rs 53.36 billion, primarily concentrated in listed company shares, with five funds having assets exceeding Rs 1 billion. Matured mutual funds have provided average annual returns of 15.76%.

SIPs are gaining popularity as they allow investors to start with as little as Rs 1,000 per month, promoting financial discipline and long-term wealth creation. The emergence of Systematic Transfer Plans (STP) and Systematic Withdrawal Plans (SWP) is further reshaping Nepalis’ financial habits. SEBON has emphasised mutual fund growth as a long-term market development tool, requiring funds to disclose their portfolios monthly to ensure investor protection and transparency.

The Dark Side: When Easy Money Becomes a Trap

The shift toward stocks is not without serious risks. The same digital platforms that democratize access also enable manipulation. TikTok, Instagram Reels, and YouTube have become new classrooms for financial education, but unverified trading advice can fuel herd behavior and speculation. As one observer noted, some influencers overlay trading signals on astrological charts.

Retail investors, who dominate NEPSE, tend to chase short-term gains rather than build long-term wealth. The past five years provide a sobering lesson: between July 2021 and June 2022, the NEPSE index fell by almost 40%. The “easy money” mentality is particularly dangerous. Many young investors enter the market expecting quick profits, treating it as a lottery rather than a serious financial endeavour.

Moreover, the structure of Nepal’s IPOs, market with its lottery-based micro-allotments of just 10 shares per successful applicant, creates a system where mass shareholding produces a negligible tradable supply. Nepal doesn’t lack investors; it lacks a market structure that protects investors from structural traps.

The Role of Policy and the New Government

The stigma against the share market has deep political roots. Nepal’s negative image of the share market is not random; it has strong political roots. When Baburam Bhattarai was the Finance Minister, he publicly called the stock market a “casino.” That single statement shaped public thinking for years and discouraged many Nepalis from seeing the capital market as a serious place for investment.

But that mindset is now slowly changing. Today, Dr Swarnim Wagle, a Harvard-educated development economist, is leading a new narrative. With his international exposure, policy understanding, and strong public credibility, he is sending a clear message: Nepal’s stock market is not a gambling place, but an important tool for national wealth creation and long-term economic growth. Wagle has assured investors that reforms are underway based on the NEPSE restructuring report and that positive developments can be expected soon.

The government has directed Nepal Rastra Bank, SEBON, and NEPSE to implement the capital market reform task force report. The government recently released the “National Commitment” document which signals structural changes in the capital market over the next five years. Wagle has also emphasised that the government is prioritising efforts to remove Nepal from the FATF grey list. SEBON Chairman Santosh Narayan Shrestha has set “Mission 2082” to implement intra-day trading within a year, a move he argues will bring “real liquidity and professionalism” to the market.

Conclusion: A Transformation Underway

Nepal is not replacing gold, land, and cooperatives with the stock market overnight. The transformation is uneven, contested, and fragile. But the direction is unmistakable. Over 6.9 million Demat accounts, 53 mutual funds with over NPR 61 billion in AUM, and millions of IPO applicants represent not just numbers but a generational shift in how Nepalis think about savings, risk, and wealth. The rise of SIPs and mutual funds signals a move toward disciplined, long-term investing. The presence of a Harvard-educated finance minister who respects the market signals institutional validation.

Yet challenges remain. Financial literacy lags behind market participation. Social media hype creates unrealistic expectations. The structure of IPO allotments fragments ownership beyond usefulness. The cooperative crisis remains unresolved, with thousands of families still waiting for their savings to be returned.

The challenge now is not to halt this shift but to ensure it does not become a mirage, a bubble fueled by liquidity rather than real capital formation. For a country that has historically buried its savings in gold and land, that would be a revolution worth celebrating. But it will require more than enthusiasm, it will require structural reforms, financial education, and a fundamental shift in how Nepalis understand the relationship between risk, return, and wealth creation.

Sources: CDSC (Demat/Mero Share statistics), SEBON annual reports, Nepal Rastra Bank, Federation of Nepal Gold and Silver Dealers’ Associations, Nepal Stock Exchange (NEPSE), Department of Land Management and Archive (DoLMA), and various capital market reports (2025–2026)

Article By: Safal Basyal