Sebon considers allowing non-resident Nepalis to invest in secondary market

KATHMANDU: The Securities Board of Nepal (Sebon) is contemplating revisions to its regulations to permit Non-resident Nepalis (NRNs) to participate in the country’s secondary market.

Sebon has reported that a panel established to investigate this issue has recently submitted a comprehensive report addressing the technical and legal challenges that need to be overcome to facilitate NRNs’ involvement in Nepal’s stock exchange market. The committee, led by Sebon’s board member Sujan Kumar Kafle, was tasked with studying the matter.

Ramesh Hamal, Chairman of Sebon, expressed optimism about the report’s findings and indicated that the regulatory body intends to proceed with amending the regulations in accordance with the recommendations put forth by the study panel. He believes that this initiative could potentially bolster capital infusion into the stock exchange market and attract more foreign currency into the country.

NRNs have long advocated for the authorities to grant Nepali citizens living abroad the opportunity to invest in the country’s secondary market. In its policy and program for the current fiscal year, the regulatory body overseeing Nepal’s stock exchange market has expressed its intention to facilitate NRNs’ participation in the secondary market.

Sebon had previously announced its plans to finalize the necessary legal framework for this matter within three months back in May. The government’s budget statement for the current fiscal year has also signaled its willingness to welcome NRNs to invest in hydropower and other real sector companies listed on the stock market, leveraging the capital, technology, and expertise of the Nepali diaspora to advance national development.

However, progress on this front has been sluggish, primarily due to the absence of relevant legislation. Sebon has made provisions to allocate 10 percent of shares in the primary issuance of securities to Nepalis working abroad.

According to market analysts, Nepal’s securities market has struggled to gain momentum because of the restrictions on external capital investment in securities, a practice widely embraced in numerous other countries. Currently, only Nepali residents within the country are eligible to invest in both primary and secondary markets.