Inactive Demat Accounts to Be Frozen After 5 Years Without Renewal: SEBON's New Policy
SEBON's new policy mandates automatic suspension of Demat accounts inactive for over five years without renewal. Additional reforms aim to enhance IPO transparency, enforce bank fund checks for secondary trades, and enable NRNs to trade shares like local residents.
SEBON Introduces Automatic Freezing of Dormant Demat Accounts
The Securities Board of Nepal (SEBON) has announced a major regulatory update that will automatically freeze or close Demat accounts that have remained inactive and unrenewed for more than five years, particularly those holding no securities. This provision is part of SEBON’s recently unveiled policies and programs for the fiscal year 2082/83.
To enforce this change, SEBON has instructed the Central Depository System and Clearing Ltd. (CDSC) to begin closing such accounts. If the renewal fee cannot be collected at the time of closure, the CDSC is permitted to write it off. If collected, the amount must be forwarded to CDSC. The regulatory framework is being updated to facilitate this move.
New Trading Compliance and IPO Process Modernization
In another significant update, SEBON is introducing a mechanism where share transactions in the secondary market will only be allowed if sufficient funds are available in the investor’s bank account. This aims to prevent trade mismatches and speculative trading.
For primary share issues (IPOs), the board is developing a real-time application blocking system, where funds will be immediately held at the time of IPO application and automatically released after the allotment.
NRNs Can Now Trade Like Local Investors
A noteworthy reform is the inclusion of Non-Resident Nepalis (NRNs), allowing them to participate in the Nepali stock market using their Nepali citizenship as if they were domestic investors.
Focus on Transparency, Oversight, and Investor Protection
SEBON has committed to stronger oversight mechanisms to curb illegal trading and market manipulation, develop diversified financial instruments, and enhance IT infrastructure to reduce systemic risk.
Investor education will also be a key priority, with ongoing capital market literacy programs and dedicated efforts to promote research and trust in the financial ecosystem.