They have asked Nepal Rastra Bank -- the central regulatory bank -- to change the existing policy and rule that do not allow them to work as a stock broker.
Writing a letter to the central bank on Tuesday, Nepal Bankers Association (NBA) formally sought the regulator's permission to work as the stock broker.
In its letter to the central bank, the umbrella organization of commercial banks of the country argued that a large population of the country was still out of the range of the capital market while 50 brokerage firms licensed by capital market regulator Securities Board of Nepal (Sebon) were highly centered in the main cities of the country.
NBA has cited expansion of branch offices of commercial banks across the country and their connection with their respective central offices through optical fiber, VSAT and ADSL, among other mediums, which allow them to reach beyond major cities to work as the stock broker.
“If commercial banks are allowed to involve in trading of securities, capital market can become bigger and more managed as the capital spread in villages can be channelized toward productive sector through the capital market,” states the letter undersigned by NBA President Upendra Poudyal.
The association has also maintained that allowing commercial banks to work as stock broker will help to expand share trading in other parts of the country.
However, the banking industry's fresh lobbying has disappointed brokerage firms. “It's up to the regulator to call a shot on whether to allow banks to work as stock brokers. However, our concern is that the current priority is to develop infrastructures and ensure transparency in the capital market rather than issuing licenses to the banks,” Priya Raj Regmi, president of Stock Brokers' Association of Nepal, said. “We can go and work anywhere in the country if there is business scope.”
Regmi also said it is not the time yet to allow banks to come for trading of shares. “Since they are listed with the stock market, there are also issues of conflict of interest,” he added.
Nepal Rastra Bank (NRB) does not allow bank and financial institutions (BFIs) to work as stock brokers. “The central bank does not have any immediate plan to open the doors for the banks to work as stock brokers. Whether to allow BFIs to work as stock brokers is a matter of debate and dispute in other parts of the world also. NRB encourages banks to focus mainly on their core banking business,” Trilochan Pangeni, spokesperson of NRB, told Republica.
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