Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Lending against shares by banks and financial institutions in Nepal has increased significantly in the current fiscal year, signaling a revival in investor activity in the country’s stock market.
According to data released by the Nepal Rastra Bank, banks and financial institutions had extended Rs 156.15 billion in loans against share collateral by the end of Magh in the current fiscal year.
The figure represents an 11 percent increase compared to the end of the previous fiscal year in Asar, when such lending stood at Rs 140.70 billion.
Rs 15.45 Billion Loan Expansion in Seven Months
The central bank data shows that Rs 15.45 billion in additional credit has been injected into the market through share-backed lending during the first seven months of the fiscal year.
The rise reflects increasing investor confidence in the equity market as interest rates decline and market liquidity improves, encouraging both retail and institutional investors to leverage their shareholdings for financing.
Large Ticket Loans Dominate
Loans backed by shares exceeding Rs 10 million recorded notable growth during the review period.
Such loans increased 10.9 percent to Rs 109.68 billion, up from Rs 98.92 billion recorded by the end of the last fiscal year.
The dominance of large-ticket lending indicates that high-net-worth investors and large portfolio holders continue to account for the bulk of margin lending activity in Nepal’s capital market.
Mid-Level Investors Increasing Participation
Credit extended against shares in the Rs 5 million to Rs 10 million range reached Rs 18.51 billion, marking a 15.5 percent increase compared to the previous fiscal year.
Financial analysts say this segment reflects the growing participation of mid-level investors, particularly as declining bank interest rates make leveraged equity investment more attractive.
Similarly, loans in the Rs 2.5 million to Rs 5 million bracket increased 9.5 percent to Rs 19.23 billion, according to the central bank data.
Loans below Rs 2.5 million rose to Rs 8.72 billion, representing a 6.7 percent increase compared to the previous fiscal year.
Political Developments Influence Market Recovery
Nepal’s stock market had slowed after the Gen Z protests held on Bhadra 23 and 24, which created political uncertainty and dampened investor sentiment.
However, the market began to recover in Magh after the election of members to the House of Representatives was confirmed, improving political clarity.
Following the completion of voting on Falgun 21 and the release of election results, both market turnover and stock indices have been trending upward, reflecting renewed investor confidence in the country’s equity market.
The growth in share-backed lending is widely seen as an indicator of increasing leverage and liquidity flowing into Nepal’s capital market, a development closely watched by regulators and investors as trading activity strengthens in the post-election period.
Your email address will not be published. Required fields are marked *
Comment *
Name *
Email *
Website
Save my name, email, and website in this browser for the next time I comment.
