The Great Financial Reset: Nepal’s Path to Prosperity

Imagine Nepal’s economy as a giant car. Currently, it’s a shaky vehicle with an aging engine; brakes that fail on steep descents, and a GPS that freezes exactly when you need it the most.

The Great Financial Reset is the high-tech engineering blueprint designed to transform that unreliable car into a super-safe, lightning-fast racing machine. This isn't just a repair; it’s a total reimagining of our financial DNA.

Here is the 9-Pillar Plan to modernize Nepal forever.

Pillar I: Technological Sovereignty – The High-Tech Upgrade

The Problem: A System Built to Fail

Currently, the Nepal Stock Exchange (NEPSE) operates like an outdated video game console—it simply freezes when too many players join the game. This lack of capacity leads to frequent system crashes during peak trading hours. Furthermore, the market is "one-way"; you can only earn if prices rise. This means when the market enters a downturn, every single investor loses, leaving the entire nation's wealth vulnerable to crashes.

The Solution: Importing Global "Brainpower"

The plan is to divest a 15–25% stake in NEPSE to a global heavyweight like the National Stock Exchange (NSE) of India. This is not a simple sale of shares; it is a strategic acquisition of world-class technology and governance.

• T+0 Settlement (Instant Cash):Currently, when you sell a stock, your money is "locked" in the system for days. With this upgrade, the moment you click "sell," the cash hits your account instantly. No more waiting, no more capital lock-up.
• The "Safety Net" (Derivatives):We introduce Futures and Options. Think of this as a financial umbrella. While an umbrella cannot stop the rain (a market crash), it keeps you dry by allowing you to hedge your risks and even profit while prices are falling. This ensures the market remains active and profitable in both "Bull" and "Bear" cycles.
• Robot Cops (AI Surveillance):Market manipulation and insider trading currently go undetected because human monitoring is too slow. We will deploy Artificial Intelligence as "Robot Cops" that watch every single trade in real-time. They detect "cheating" patterns instantly, ensuring a fair, transparent, and honest marketplace for the average citizen.

Pillar II: Institutional Stability – The "Pause Button"

The Problem: Strategic Manipulation vs Retail Panic

Currently, the market faces a "Candy Store" crisis. Large investment firms—specifically listed companies and those in the IPO pipeline—often treat the secondary market as a playground for quick gains. They inject massive capital into specific stocks to trigger a "Pump" (rapid price hike), luring in retail investors who fear missing out. Once the price is high, these institutions "Dump" their shares, causing a crash that leaves ordinary citizens holding the bag.

To stop this, SEBON recently took the drastic step of banning these investment companies from direct market participation. While this stops the manipulation, it also kills liquidity, leaving the market dry and stagnant. Banning is a "bandage," not a cure.

The Solution: The 90-Day Holding Mandate

Instead of locking these big players out of the room, we should simply change the rules of how they play. The 90-Day Rule transforms aggressive speculators into stable market pillars.

• The Rule: Any listed or listing-bound investment firm that purchases stock in the secondary market is legally prohibited from selling that stock for a minimum of 3 months (90 days).
• The Logic: If you know you cannot sell for 90 days, you won't buy "junk" or "hype" stocks just to flip them. You will only buy high-quality companies with strong earnings because you are "married" to that stock for at least one full financial quarter.

The Result: From Pogo Sticks to Escalators

By implementing this rule, we achieve three critical shifts:

1. Long-Term Orientation: Institutions start behaving like professional fund managers. They analyze quarterly reports and business health rather than chasing social media rumors.
2. Market "Anchors": During a downturn, these companies cannot panic-sell. Their mandated holding acts as a Liquidity Floor, preventing the market from falling freely. They become “Anchors" that keep the ship steady during a storm.
3. Ending the "Pump and Dump": Since big players cannot exit quickly, the incentive to artificially inflate prices vanishes. Price growth becomes organic, driven by company performance rather than institutional manipulation.

The Goal: We don't want a market that jumps up and down like a pogo stick. We want a market that moves like a steady escalator—consistent, predictable, and safe for everyone.

Pillar III: Valuation Reform – Ending the "Fair Price" Paradox

The Problem: The "Cost of Chairs" Valuation

Imagine you own a world-class technology company like eSewa or WorldLink. You have spent years building intellectual property, a massive user base, and a trusted brand. However, when you go to list on the stock exchange, current regulatory mindsets often try to cap your share price based solely on your "Net Worth”the physical value of your office chairs and computers.

This is the Valuation Paradox. It forces high-tech, "asset-light" companies to sell their shares for far less than they are worth, while traditional companies with old buildings (bricks and mortar) get higher valuations. This unfairness demotivates our smartest entrepreneurs from entering the market, leaving us with a stock exchange dominated by just "Banks and Hydro."

The Reliance Spinning Mills Lesson

Recent events, such as the Reliance Spinning Mills IPO, highlight the need for urgent reform in opening price ranges.

• The Inconsistency: Current practices create a massive divide. Companies with a net worth below 100 get an opening range of up to 3 times their net worth per share, but once a company crosses that 100 net worth thresholds, the rule shifts, often limiting them to 3 times their face value.
• Discouragement: This practice penalizes growth. A successful company with a strong net worth should not be "punished" with a tighter opening range than a smaller, less stable firm. Such regulations act as a "Keep Out" sign for the real sector and manufacturing giants.

The Solution: Market-Driven Price Discovery

To modernize Nepal, we must allow the market to determine a company's true value through a refined book building process.

• Reforming Book Building: We must move away from rigid, net-worth-based caps. Instead, use a transparent bidding system where institutional investors determine the "Cut-off Price" based on future earnings, technology, and brand power.
• Easy Premium IPOs: Companies with a proven track record of profit should be allowed to issue shares at a premium price without jumping through endless regulatory hoops.
• Instant Public Conversion: We should simplify the path for successful private IT and service firms. If a private company is profitable and transparent, it should be able to convert to a "Public Limited" status and list its shares almost instantly.

The Result: A "Real Sector" Explosion

By fixing the valuation rules, we transform the stock market from a "Banking Club" into a National Engine for Innovation. When IT companies and manufacturers see they can get a fair price for their hard work, they will rush to list. This brings "Real Sector" stability to NEPSE, making it more resilient and attractive to global investors.

Pillar IV: ISIN Reform – One Share, One Identity

The Problem: The "Two-Class" Share System

Currently, Nepal’s market suffers from a confusing "identity crisis." We give different "ID numbers" (ISIN codes) to founder (promoter) shares and public shares. This is like saying two identical 1,000-rupee notes have different values just because of who held them first. This "fake wall" creates a fragmented market where the same company's ownership is split into two different pools, confusing investors and killing liquidity.

Particularly in Banks and Financial Institutions (BFIs), promoters are often "punished" for their role. Their shares trade at a massive discount compared to public shares, despite representing the exact same ownership and dividend rights. This unfair gap discourages serious long-term investors from taking foundational roles in new companies.

The Solution: Post-Lock-In Fungibility

A share is a certificate of ownership, and its "identity" should be universal. Once a company matures, we must move to a Single ISIN system.

• Equal Treatment for Promoters: Once the regulatory "lock-in" period ends, promoter shares should automatically convert and trade under the same ID as public shares. There should be no price penalty for being a founder. If the rights are the same, the price must be the same.
• The 51% Stability Rule (Hydropower): While we want trading freedom, we must protect national infrastructure. For Hydropower projects, the Director Composition must maintain a minimum 51% holding at all times from which small quantity holder cannot change significantly in management and company and investment will be in safe hands. This ensures that the people who built the dam remain responsible for running it, preventing "hit-and-run" management.
• Director Accountability: To ensure skin in the game, directors must be prohibited from selling their required holdings while in office and for 2 years after their resignation. This prevents "insider exits" where leaders dump shares just before bad news hits.

The Result: A "Fluid" and Honest Market

By unifying ISIN codes while maintaining strict ownership floors for critical sectors, we achieve two things:

1. Fungibility: Trading becomes simple. Investors can buy or sell any share without worrying about "promoter" vs. "public" labels.
2. Trust: Promoters are rewarded with fair market prices, but they are also held accountable through mandatory long-term holdings in infrastructure.

Pillar V: Margin Lending Modernization – The 30/100 Rule

The Problem: The "Cash-Only" Barrier

In many developed markets, investors use their existing stocks as collateral to grow their portfolios. In Nepal, however, many smart investors—especially the younger generation—are held back because they lack immediate cash to seize market opportunities. When liquidity dries up, the market stalls because there isn't enough "buying power" to keep the wheels turning. Without a standardized, broker-driven system, investors often resort to informal, risky borrowing or simply miss out on growth cycles, leaving the market thin and prone to manipulation by those with massive cash reserves.

The Solution: Standardized 30/100 Leverage

To modernize NEPSE, we must move from complex, bank-led "Share Karja" to a streamlined, broker-managed 30/100 Margin Lending System.

• The 30/100 Mechanism: An investor provides 30% (Initial Margin) of the value in cash or existing shares, and the broker finances the remaining 70%.

• Example: To buy NPR 100,000 worth of shares, you contribute NPR 30,000, and the broker provides NPR 70,000.
  • The "A-Grade" Filter: To prevent systemic risk, this leverage is strictly reserved for companies that are profitable, have a clean audit history, and maintain a high net worth (A-Grade stocks). You cannot use borrowed money to gamble on speculative or "junk" stocks.
  • Automated Risk Management:* Maintenance Margin: Investors must keep at least 20% equity in their account.
• The Margin Call: If the stock price falls and your equity drops below 15%, the system triggers an automatic "Margin Call," requiring immediate collateral or an automated sell-off to protect both the investor and the broker from total loss.

The Result: Deep Liquidity and Empowerment

By modernizing margin lending, we achieve:

1. Market Depth: Increased "buying power" means more daily transactions, making it easier for everyone to enter or exit positions without causing extreme price swings.
2. Wealth Creation: Disciplined investors can grow their portfolios faster by leveraging their existing assets.
3. Safety: By limiting leverage to the best companies, we encourage "quality investing" rather than "market gambling."

Pillar VI: The Crown Jewels – Launching Nepal’s Economic Giants

The Problem: The Empty Shelf

Currently, the Nepal Stock Exchange (NEPSE) is heavily dominated by banks and small-to-medium hydropower projects. While these are essential, the "Main Street" giants—the companies that touch every Nepali’s life daily—remain locked behind the doors of government ownership. Because these "Crown Jewels" aren't listed, the public cannot benefit from their massive profits, and the companies themselves lack the market pressure to innovate or become more efficient.

The Solution: Democratizing the Giants

We must list Nepal’s most powerful state-owned enterprises (SOEs) on the stock exchange. This isn't just about raising money for the government; it's about giving ownership of the country's success back to the people.

• The Big Three (Initial Wave):

• Nepal Electricity Authority (NEA):With revenues exceeding NPR 100 billion and consistent profitability, listing a 15–20% stake in NEA would instantly create the most valuable and stable stock in Nepal's history.
• Nepal Oil Corporation (NOC):As the sole importer of fuel, NOC is a massive cash-flow engine. Listing it would force transparency in fuel pricing and allow citizens to earn dividends from every liter of petrol sold.
• Nepal Telecom (NTC) Phase II: While already listed, NTC's government stake is still too high. Releasing another 15% to the public would deepen market liquidity and provide the government with a massive "cash injection" for development without taking a single loan.
  • The "Citizen’s First" Allocation: A significant portion (at least 30%) of these IPOs must be reserved for local residents, migrant workers, and low-income citizens. This ensures that the wealth created by national monopolies stays in the hands of the many, not the few.
  • Professional Board Governance: Post-listing, these companies would be governed by a board that includes independent, market-nominated experts, ending the era of purely political appointments.

The Result: A Balanced and "Bulletproof" Market

By listing the Crown Jewels, we achieve:

1. Market Diversity: NEPSE stops being just a "Bank and Hydro" index and becomes a true reflection of the entire Nepali economy.
2. Public Wealth: Millions of Nepalis gain access to high-dividend, stable stocks that act as a "savings account" for their future.
3. Efficiency: Public scrutiny and quarterly reporting requirements will force these giants to reduce waste, adopt better technology, and provide better service to the public.

Pillar VII: The Sovereign Welfare Fund – The National Shield

The Problem: The "Sleeping Capital" Trap

Currently, Nepal has two major pools of worker savings: the Employees Provident Fund (EPF) and the Social Security Fund (SSF). As of 2026, these funds manage trillions of rupees. However, a massive portion of this capital sits "asleep" in low-interest fixed deposits in banks. Individually, these funds lack the coordinated "muscle" to stabilize the stock market. When the market crashes, these funds aren't integrated enough to step in, leaving the future savings of millions of workers vulnerable to volatility.

The Solution: A Unified Sovereign Wealth Fund (SWF)

We must merge the investment arms of the EPF and SSF into a single, massive Sovereign Welfare Fund (SWF). This creates a "National Shield" that turns worker savings into a powerhouse for development and stability.

• Market Stabilization (The Buyer of Last Resort):With a unified fund, Nepal gains a massive "Anchor Investor." During market downturns, when retail investors panic, the SWF can step in to buy quality, undervalued stocks (like the Crown Jewels from Pillar VI). This provides a "floor" for the market, preventing free-falls and protecting the wealth of every small investor.
• The "Wealth-to-Welfare" Loop: Instead of earning 7–9% in a bank, the SWF targets 12–18% returns by investing in high-growth national infrastructure. These "super-profits" are then funneled into a National Healthcare Pool.
• Universal Health & Insurance: By utilizing the excess returns from the stock market, the fund can provide Cashless Healthcare and Accident Insurance for every contributor. The market literally pays for the worker's hospital bills.

The Result: From Savings to Total Security

By creating this Sovereign Shield, we achieve:

1. Systemic Stability: A deeper, more mature market that is less prone to manipulation and "crashes."
2. Social Protection: The stock market stops being a "casino for the rich" and becomes the engine that guarantees medical security and dignified retirement for the working class.
3. National Pride: Every worker with an SSF/EPF account can look at the massive hydropower dams or NTC towers and say, "I own a piece of that, and it’s paying for my family’s health."

Pillar VIII: Global Engines – FII, FPI, and the Roadmap to Wealth

The Problem: The "Closed-Loop" Trap

Currently, Nepal’s stock market relies almost entirely on local savings. This is like trying to run a city on a single small battery—it works for basic needs, but it isn't enough to power a modern, industrial economy. Without global capital, our market lacks the "fuel" needed for massive projects, and our national Foreign Exchange (Forex) Reserves remain under constant pressure. Furthermore, without global competition, many local companies lack the incentive to adopt world-class standards of transparency and honesty.

The Solution: Opening the Gates to Global Capital

We must open the secondary market to Foreign Institutional Investors (FII) and Foreign Portfolio Investors (FPI). These are the "Global Engines" that turn developing markets into world leaders.

• Exploding Forex Reserves: As of 2026, Nepal has successfully rebuilt its policy buffers with reserves reaching nearly $20 billion. However, to sustain mega-projects, we need continuous inflow. When a fund in London or New York buys NEPSE shares, they bring in US Dollars. This inflow directly bolsters our National Forex Reserves, making the country financially "bulletproof" against global economic shocks.
• Massive Wealth Creation: Global investors bring higher valuations. As demand for Nepali stocks increases globally, the total value of our companies—and the shares held by local Nepalis—skyrockets. This creates generational wealth for the millions of citizens who already own those assets.
• Employment & Opportunity: With billions in new capital, Nepali companies can expand faster. This means building more factories, launching new tech hubs, and creating thousands of high-paying jobs (over 33,000 committed in early 2026 alone) for our youth right here at home.
• The Transparency "Upgrade": Global investors demand honesty. To attract their money, Nepali companies must follow International Financial Reporting Standards (IFRS). This forces clearer financial reports, independent audits, and zero tolerance for "hidden" deals, protecting small local investors alongside the big ones.

The Result: A Tiger Economy

By inviting the world to invest in Nepal, we achieve:

1. Financial Independence: we stop relying on high-interest foreign loans and start using foreign "Equity" to build our future.
2. Global Integration: Nepal stops being a "frontier" market and becomes a recognized part of the global financial system.
3. Professionalism: Our companies become world-class, making "Made in Nepal" a symbol of quality and trust.

Pillar IX: The Currency Bridge – Our Competitive Edge

The Problem: The "Foreign Exchange" Fear

For many international investors, the biggest fear isn't the stock market, it’s the currency. They worry that even if their stocks go up by 20%, a sudden devaluation of the local currency could wipe out all their profits when they try to take their money home. This "exchange rate risk" usually keeps big institutional capital away from smaller emerging markets like Nepal.

The Solution: Leveraging the 1.6 Peg

Nepal possesses a unique "Secret Weapon" that almost no other emerging market has: the 1.6 Fixed Exchange Rate (Peg) with the Indian Rupee (INR). We must use this as a bridge to attract the massive capital sitting in India.

• Zero Currency Risk for Indian Investors: Since the NPR is pegged to the INR at a stable 6, an investor from Mumbai or Delhi can invest in NEPSE without fearing that the currency will collapse. For them, investing in a Nepali hydropower giant feels like investing in their own backyard, but often with higher growth potential.
• The "India-Plus" Strategy: India is one of the world's fastest-growing economies, and its investors are hungry for new opportunities. By marketing NEPSE as an "India-Plus" market, we tap into a pool of billions of dollars in nearby capital.
• Forex Fortress: As of 2026, Nepal’s foreign exchange reserves have surged to over $22 billion (NPR 3.2 trillion)—enough to cover 18 months of imports. This record-breaking "shield" ensures the peg remains rock-solid, giving global investors the ultimate confidence that their capital is safe.
• The Dividend Superhighway: With the recent RBI and NRB policy alignments, it is now easier than ever for Indian institutions to invest in Nepali corporate bonds and stocks. We must streamline the "One-Window" system so that dividends can be repatriated back to India as easily as a local bank transfer.

The Result: Capital Without Borders

By building this currency bridge, we achieve:

1. Unlimited Liquidity: We tap into one of the world's largest pools of institutional capital (India) to fuel our national projects.
2. Stable Valuation: Our market prices become more stable because they are backed by the confidence of the regional economic superpower.
3. Regional Integration: Nepal becomes a key financial hub in South Asia, moving beyond just being a trade partner to becoming a financial partner.

Conclusion: The Dawn of the Great Financial Reset

For too long, the Nepali stock market has been viewed as a high-stakes "casino" where the many lose so the few can win. The Great Financial Reset changes that story forever.

This is not just a list of policy changes; it is a National Economic Engine designed to turn the hard-earned savings of every Nepali citizen into a shield of prosperity. By bridging the gap between our local potential and global capital, we are ending the era of "hit-and-run" management and speculative bubbles.

The Final Vision: A Wealth-Locked Nation

• A Market of Integrity: Where NSE-backed technology and AI surveillance ensure that no insider can cheat the system, and every small investor has a fair shot.
• Infrastructure That Lasts: Where the 51% Stability Rule and 20-Year Evolution Rule ensure our hydropower giants grow into permanent investment powerhouses.
• Dignity for the Worker: Where the Sovereign Welfare Fund uses the profits of the "Crown Jewels" to guarantee universal healthcare and a secure retirement.
• A Regional Powerhouse: Where the Currency Bridge and Forex Record make Nepal the safest, most attractive destination for capital in South Asia.

We are standing at a crossroads. We can continue with a fragmented, opaque system, or we can embrace a future where our market is transparent, liquid, and globally respected.

This reset is our path to Financial Sovereignty. It is how we build a Nepal where our youth don't have to leave for opportunities, because the opportunities—and the wealth—are being built right here, on our own soil, by our own people.

 By Aashish Bhattarai 

Bhattarai, a chartered account by profession, is currently associated with Garima Bikas Bank Limited