Banking News— Share brokers in Nepal have been left anxious as the Central Investigation Bureau (CIB) of Nepal Police has intensified its investigation into credit-based share trading practices. Concerned about potential legal consequences arising from such transactions, brokers have begun lobbying regulators for more flexible policies.

Representatives of the Stock Brokers Association recently met with Nepal Securities Board (SEBON) Chairman Dr. Gopal Prasad Bhatta, urging the regulator to amend existing rules and ensure that brokers’ bank accounts are not frozen during investigations.

The brokers argued that the current legal requirement mandating investors to deposit at least 25 percent of the transaction value as collateral before purchasing shares is impractical. They requested SEBON to revise the provision, allowing brokerage firms the discretion to decide whether or not to collect advance collateral from clients.

They also expressed concern that the CIB’s practice of freezing the primary bank accounts used by brokerage firms for daily transactions and settlement operations during investigations has created serious disruptions in the securities market.

According to the brokers, freezing these accounts delays payments to hundreds of thousands of retail investors and creates confusion and mistrust in the market. They therefore requested amendments to Section 6(2) of the Bank Account Freeze and Release Regulation, 2081 (2024/25) to explicitly exempt settlement accounts maintained by licensed payment service providers and securities brokers from being frozen during investigations.

The association further urged SEBON to take necessary initiatives to protect brokers’ settlement accounts from such restrictions.

The concerns come after the Department of Money Laundering Investigation filed a case following the discovery of billions of rupees worth of credit-based share transactions conducted in violation of regulations at Bhrikuti Stock Broking Company (Broker No. 55).

According to SEBON’s investigation report, controversial businessman Deepak Bhatta, along with Agrawal, Shah, Mor, Golchha and others, allegedly purchased and sold shares worth billions of rupees without depositing a single rupee as the mandatory advance collateral, with the alleged involvement of Bhrikuti Stock’s Chief Executive Officer, Sandeep Chachan.

The report further stated that Bhrikuti Stock had settled Bhatta’s multi-billion-rupee transactions by utilizing funds belonging to its other retail clients through the netting system.

Following the findings, SEBON suspended Bhrikuti Stock Broking Company and issued a show-cause notice seeking clarification from the brokerage.