KATHMANDU, Oct 17: Banks and Financial Institutions (BFIs) injected Rs 9.67 billion in loans against shares in the first two months of the current fiscal year.
The records with Nepal Rastra Bank (NRB) show that the BFIs’ lending in the segment grew by 10.7 percent during mid-July and mid-September this year. The credit that the BFIs issued in the segment was Rs 90.09 billion as of the end of the last fiscal year.
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After the central bank adopted flexible monetary policy for the current fiscal year, it removed the Rs 200 million cap on loans for margin trading in share securities. Likewise, the BFIs have also reduced their interest rates largely during the period, citing the excess loanable funds underlying with them.
As a result, the secondary market took a bullish trend while the market capitalization crossed Rs 4.10 trillion. As of mid-September this year, the BFIs invested a total of Rs 99.76 billion in margin lending, witnessing a growth of 38.6 percent compared to the same period last year.
In the review period, loan issuance in margin lending of more than Rs 10 million increased 17.9 percent to reach Rs 65.93 billion. The margin lending in the segment of Rs 2.5-5 million declined three percent to Rs 13.98 billion, while the loan valuation of up to Rs 2.5 million declined 3.9 percent to Rs 7.31 billion.
According to the NRB, the overall private sector lending by the BFIs grew 1.4 percent to Rs 73.39 billion in the review period. On a year-on-year basis, credit to the private sector from BFIs increased 6.6 percent in mid-September 2024.
