Rastriya Swatantra Party (RSP) lawmaker Lima Adhikari has questioned the effectiveness of the 5% IPO quota allocated to mutual funds, asking whether the provision has genuinely benefited retail investors and contributed to Nepal's capital market development.

Speaking during a meeting of the House of Representatives Finance Committee, where the committee reviewed the performance of the Securities Board of Nepal (SEBON), Adhikari called on the regulator to publicly evaluate whether the quota has improved market depth and protected the interests of ordinary investors.

She argued that, instead of supporting long-term market development, many mutual funds appear to be engaging in IPO share flipping by selling allocated shares shortly after listing to secure quick profits. According to her, this trend raises concerns about whether the current policy is fulfilling its intended purpose.

Adhikari also urged SEBON to clarify whether it plans to introduce a lock-in period or other regulatory measures to prevent mutual funds from rapidly disposing of IPO shares. She said stronger safeguards may be necessary to ensure institutional investors contribute to market stability rather than short-term speculation.

She emphasized that if mutual funds continue using their preferential IPO allocation primarily for short-term gains, the rationale behind the 5% quota could be undermined. A comprehensive assessment of its impact on investor protection, market development, and long-term investment culture is therefore needed, she added.