Impact of NRB policy: Share pledge loan decreased by Rs. 2.36 billion in just three months
November 20, 2078 16:25 VikasNews
Kathmandu. The policy of Nepal Rastra Bank (NRB) to tighten the flow of margin credit through the monetary policy of the current Fiscal Year has had an effect. Due to the policy impact, loans of margin nature decreased by more than Rs. 2.36 billion in the corresponding period of the current Fiscal Year as compared to the first quarter of the previous Fiscal Year.
According to the Nepal Rastra Bank, loans of margin nature had increased by Rs. 8.99 billion in July, August and September of the last fiscal year. However, loans of margin nature decreased by Rs. 2.36 billion in July, August and September of the current Fiscal Year. Compared to mid-July last year, the inflow of margin loans has decreased by 2.2 percent till mid-October.
Banks and financial institutions have disbursed loans of margin nature equivalent to Rs. Banks and financial institutions had given loans of margin nature amounting to Rs. 106.28 billion in mid-July last year.
Through the monetary policy of the current Fiscal Year, Nepal Rastra Bank had made a policy arrangement that the same person or company can borrow up to Rs. 40 million from one bank or financial institution and up to Rs. 120 million from all banks and financial institutions. NRB argued that such an arrangement would benefit investors who invest in stocks with small loans.
The recently released data confirms the NRB’s argument. According to the data, loans of margin nature of more than Rs 10 million have declined by 7.6 percent while loans of Rs 5 million to Rs 10 million have increased by 7 percent. Similarly, loans of margin nature ranging from Rs 2.5 million to Rs 5 million have increased by 9.5 percent while loans below Rs 2.5 million have increased by 15.2 percent.
NRB had set a limit of Rs 40 million and Rs 120 million to help those who invest in shares by taking small loans. However, the NRB’s policy was opposed by investors’ associations and the stock market plummeted shortly after the monetary policy was made public.