Margin loans against share collateral issued by Nepal’s banks and financial institutions increased 18.34% in FY2082/83, reaching Rs166.50 billion, according to 12-month data released by Nepal Rastra Bank (NRB).

Margin lending stood at Rs140.70 billion in Asar 2082, meaning the sector added Rs25.81 billion in share-backed loans over the past year.

The growth in margin lending significantly outpaced overall credit expansion in Nepal’s banking sector. While total banking sector loans grew by 6.48% during FY2082/83, margin loans increased by 18.34%, making their growth nearly three times faster.

Large Loans Dominate Margin Lending

Loans of more than Rs1 crore accounted for the largest portion of margin lending. This category increased 20.75% to Rs119.45 billion, from Rs98.93 billion a year earlier.

The segment alone added Rs20.53 billion during the year and accounts for around 72% of total margin loans.

Margin loans between Rs50 lakh and Rs1 crore increased 19.49% to Rs19.15 billion, while loans between Rs25 lakh and Rs50 lakh rose 7.34% to Rs18.85 billion.

Loans below Rs25 lakh increased 10.59% to Rs9.04 billion.

Combined, loans above Rs50 lakh reached Rs138.61 billion, accounting for around 83% of total margin lending. The figures show that share-backed borrowing remains heavily concentrated among larger borrowers.

Margin Lending Adds Rs76 Billion in Two Years

Margin lending has expanded sharply over the past two years. Loans against share collateral stood at Rs90.09 billion in Asar 2081, rose to Rs140.70 billion in Asar 2082 and reached Rs166.50 billion by Asar 2083.

This represents an increase of more than Rs76.42 billion in two years.

However, the pace of expansion has moderated. Margin loans grew by 56.17% in FY2081/82, compared with 18.34% in FY2082/83.

The continued rise in margin lending points to increased borrowing against shares, particularly among larger borrowers. However, higher margin loans do not necessarily translate into higher stock prices, as a decline in share values could increase risks for both borrowers and banks holding shares as collateral.