NRB Lifts Limit on Share-Backed Margin Loans
NRB has removed the ceiling on margin-based share-backed loans and relaxed regulations on investments in organized institutions.
Nepal Rastra Bank (NRB) has amended its unified directive of 2081, removing the ceiling on margin-based loans secured against shares. Previously, the maximum single-customer exposure for such loans was capped at NPR 25 crore.
The central bank has also relaxed rules governing investments in organized institutions’ shares, debentures, and related instruments. Banks and financial institutions (BFIs) are now allowed to invest in these instruments only for periods exceeding six months. Short-term investments in unlisted shares or debentures are prohibited.
For unlisted instruments, if the shares or debentures are not listed within three years from the investment date, the corresponding amount must be transferred to the Investment Adjustment Fund from retained earnings. Funds in this account cannot be utilized until the instruments are listed.
Additionally, NRB has removed the earlier restriction that allowed BFIs to sell only up to 20% of primary capital from investments held for more than a year in a single fiscal year. These regulatory changes aim to provide greater flexibility to BFIs while maintaining safeguards for long-term institutional investments.