The Nepal Capital Market Investors Association has submitted a five-point suggestion to the Governor of Nepal Rastra Bank for the upcoming monetary policy of fiscal year 2083/84, aiming for a policy that supports the capital market.
The Nepal Capital Market Investors Association recently submitted a detailed five-point policy suggestion to Nepal Rastra Bank, outlining their expectations for the upcoming monetary policy for the fiscal year 2083/84. The association emphasized on balancing the capital market, private investment, and productive sectors.
In their letter addressed to the Governor, the association stated that the monetary policy should not only focus on controlling inflation but also actively work towards promoting production, employment, private investment, and the capital market. With liquidity improving in the banking system, interest rates declining, and a clear need for private sector investment to grow, the association stressed the importance of preventing investment capital from leaving the country and creating an easier environment for investment.
The association highlighted the capital market as a strategic financial infrastructure essential for channeling the savings of millions of citizens into critical sectors like industry, energy, infrastructure, tourism, banking, insurance, and other productive areas. They urged that the capital market be recognized as a primary sector of the economy in policy decisions. A robust capital market, they believe, would reduce industries’ reliance on bank loans and foster a more balanced financial system.
Key Suggestions on Share Collateral Loans and Institutional Investment
Among their suggestions, the association recommended reviewing the current rules for share collateral loans. They proposed increasing the loan limit to 80 percent of the 180-day weighted average price, up from the existing 70 percent. They also suggested implementing different collateral ratios based on a company financial condition. Additionally, they advised adopting a risk-based system for margin loans, making them more flexible, especially for shares of high-quality listed companies.
The association also called for facilitating institutional investor like banks, financial institutions, insurance companies, mutual funds, and pension funds to expand their long-term investments within regulatory limits. They suggested raising the current ceiling of 30 percent of core capital for banks and financial institutions investing in the capital market.
Supporting Microfinance and Attracting NRNs
Furthermore, the association requested the removal of impractical restrictions imposed on microfinance financial institutions by the monetary policy of fiscal year 2078/79. They argued that limits on dividend distribution should be lifted, and institutions with low capital or those facing pressure regarding their Capital Adequacy Ratio (CAR) should be helped to increase capital and issue rights shares when needed and justified.
To attract Non-Resident Nepalis (NRNs) to the Nepali capital market, the association urged for clear policy frameworks. Their suggestion letter included provisions for NRNs to have online access to Demat accounts and trading, assurance of investment repatriation, easy receipt of dividends, and simplified tax procedures.
In conclusion, the association appealed to Nepal Rastra Bank to include their suggestions with priority, aiming to develop the upcoming monetary policy 2083/84 as a historic policy that maintains stability, promotes production, investment, innovation, and strengthens the capital market.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
