Kathmandu – Tara Prasad Phullel, Vice President of the Nepal Investors’ Forum, has remarked that the newly announced monetary policy for Fiscal Year 2082/83 carries a positive and stock market-friendly outlook.

According to Phullel, the decision to reduce the policy rate from 5% to 4.5% signals an increase in liquidity within the financial system. “This reduction enhances the possibility of banks and financial institutions offering loans at lower interest rates, which may directly benefit the stock market,” he stated. Lower interest rates mean that investors can access cheaper capital, increasing their purchasing capacity in the stock market. He also noted that the reduction in the permanent liquidity facility rate and deposit collection rate will further ease liquidity conditions.

A key provision directly linked to the stock market is the increased limit for share mortgage loans. The policy raises the ceiling from NPR 150 million to NPR 250 million per individual, making it easier for large and institutional investors to borrow and remain active in the market.

Additionally, Phullel highlighted a provision allowing up to NPR 30 million in home loans and up to 80% of property value in loans for first-time homebuyers. This is expected to boost credit flow, positively impacting the overall financial system and, indirectly, the capital market.

The policy also increases the foreign currency carry limit for individuals traveling abroad, aiding better management of foreign currency reserves and expenditure. A cap of only 2% interest on loans up to NPR 30 million has been introduced, which encourages affordable financing, particularly benefiting startups, youth entrepreneurs, and small businesses. Phullel believes this could indirectly encourage more investment in the stock market.

He also stated that Nepal Rastra Bank Governor Dr. Vishwanath Paudel, through this monetary policy, has clearly indicated a supportive stance toward the stock market. Proposals such as more flexible regulations, the possibility of issuing bonds when needed, and self-regulation in project lending are expected to boost investor confidence and foster long-term stability and investment flow in the stock market.

Speaking with Banking News, Phullel concluded, “This monetary policy has clearly encouraged capital market investment through its provisions on liquidity, cheaper credit, and increased loan limits. It’s evident that this policy will help strengthen investor sentiment and contribute to the growth of the stock market.”