Banking News – Nepal’s newly unveiled Monetary Policy for Fiscal Year 2083/84 (2026/27) has sparked uncertainty among stock market investors, following indications that limits on share-backed loans could be reintroduced based on the financial strength of banks and financial institutions.

The concern stems from Clause 20 of the monetary policy announced by Nepal Rastra Bank Governor Prof. Dr. Bishwanath Paudel, which states that the ceiling on share-backed lending will be determined according to the financial soundness of individual banks and financial institutions. Investors fear the provision could make it more difficult to obtain loans for stock market investments in the future.

Previously, the government had formed a task force led by former Finance Minister Rameshwar Prasad Khanal to recommend reforms for Nepal’s capital market. Based on the task force’s recommendations, Nepal Rastra Bank removed the NPR 250 million (Rs. 25 crore) cap on share-backed loans available to a single borrower.

The removal of the ceiling was expected to increase lending against shares, strengthen investor confidence, and improve market liquidity. However, it also raised concerns that allowing a single borrower to obtain large loans could expose banks to greater financial risk.

With the central bank now proposing to determine lending limits based on each bank’s financial capacity, market analysts say the policy has created fresh uncertainty among investors.

Data from Nepal Rastra Bank also show that demand for share-backed loans has grown steadily over the past ten months. Outstanding loans secured against shares increased from NPR 90.09 billion in Asar 2081 BS to NPR 162.53 billion by Baisakh of the current fiscal year.

Large investors account for the majority of these loans. Borrowers with share-backed loans exceeding NPR 10 million collectively hold NPR 115.94 billion, representing a 17.2% increase compared to the previous year. By contrast, investors with loans below NPR 2.5 million account for only NPR 8.69 billion in total outstanding share-backed credit.

Market observers believe that if lending limits are linked to banks’ financial capacity, large investors who rely on substantial share-backed loans will be the most affected. They warn that reduced participation from institutional and high-value investors could increase volatility and influence overall sentiment in Nepal’s stock market.