Nepal Rastra Bank Removes NPR 200 Million Cap on Share Collateral Loans for Institutional Investors

Nepal Rastra Bank (NRB) has removed the NPR 200 million cap on share collateral loans for institutional investors. The central bank implemented this provision by issuing an integrated directive for banks and financial institutions today. With this decision, the limit on loans against share collateral for institutional investors has now been lifted.

As per Monetary Policy: This provision was included in the monetary policy issued by NRB on Shrawan 11 of the current fiscal year. The central bank today directed banks and financial institutions to implement it through a circular.

New Circular: The circular states, "The maximum single-client loan limit for margin-type loans provided against share collateral by one or more licensed institutions is set at NPR 150 million. However, this limit will not apply to institutional investors established primarily for investing in the securities market."

End of Confusion: Previously, some groups in the market had accused NRB of not implementing the provision for share collateral loans, spreading confusion. However, with today's circular, these confusions have been dispelled.

Market Impact: Analysts predict that this provision could lead to an increase in institutional investments in the share market. Some analysts suggest that daily share trading could reach close to NPR 50 billion with this change.

NRB's decision is expected to inject new momentum into the stock market, potentially strengthening investor confidence.