Kathmandu – Priyaraj Regmi, Chair of the Capital Market Committee under the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), has urged Nepal Rastra Bank (NRB) to clearly define the regulatory framework for loan against shares in the upcoming Monetary Policy for FY 2083/84.

Presenting recommendations to the central bank, Regmi highlighted the need for greater clarity on issues related to investors, stockbrokers, and Private Equity and Venture Capital (PEVC) funds.

He noted that investments made by PEVC funds are currently deducted from core capital, discouraging both PEVC firms and banks from participating in such investments. According to him, if an entity receiving up to 15 percent investment from a PEVC fund fails or goes bankrupt, the entire PEVC fund is reportedly blacklisted, creating additional risks for investors.

Regmi also pointed out that although the Securities Board of Nepal (SEBON) has introduced the concept of margin lending for stockbrokers, there is still no banking product available to support it.

“Banks are willing to provide the loans, and we are ready to borrow. The loans have even been approved, but we have not been able to utilize them because the NRB directive does not recognize margin lending as a separate lending product,” he said.

He stressed that the Monetary Policy should clearly specify whether margin lending falls under the loan against shares category or under working capital receivables financing.

Regmi further argued that the current practice of linking loan against shares to a bank’s core capital has created unnecessary pressure on the capital market, as fluctuations in banks’ core capital directly affect lending capacity.

He also suggested that the central bank adopt a more flexible approach toward banks’ lending and investment decisions. “Banks are commercial institutions capable of managing their own risks. Allowing them greater flexibility in loan against shares, investment, and exit mechanisms would support capital market development,” he added.