Investors Demand NRB Policy Reforms To Stabilize Capital Market
22nd June 2025, Kathmandu
In a recent meeting, Nepal Rastra Bank (NRB) Governor Dr. Bishwanath Paudel interacted with leading representatives from various investor associations.
Investors Demand NRB Policy Reforms
Senior investor Chhotelal Rauniyar, Acting President of Share Investors Association Nepal, Tara Prasad Phullel, General Secretary of Capital Market Investors Association, S.P. Chaulagain, and President of the Independent Capital Market Investors Association,n Dillishwor Karki (Rohan) attended the discussion.
They visited Governor Paudel to extend congratulations on his appointment and to offer their best wishes for a successful term. Moreover, they expressed hope that his leadership would usher in a stable and progressive era for Nepal’s financial system.
Past Policies Hurt the Capital Market
During the meeting, the investors shared their growing concerns about the state of Nepal’s capital market. They stressed that the market has become increasingly unstable. One of the key reasons, they pointed out, was the negative impact of previous monetary policies.
The NEPSE index has fallen significantly compared to past years. As a result, many investors have seen their capital shrink. This has led to a lack of enthusiasm and growing frustration in the investor community.
Key Issues Identified
The investor representatives highlighted several specific reasons for the market downturn. These included:
Restrictive margin loan policies that limit access to credit
Anti-market directives issued to banks and financial institutions
Falling stock prices of listed companies
Frequent changes in interest rates
Limited activity from institutional investors
These issues, according to the delegation, have weakened investor confidence and discouraged participation in the market.
Investor Participation Continues To Decline
Currently, over 6.8 million beneficiary accounts remain active in Nepal. However, daily trading volumes and investor engagement are on a steady decline. This drop in participation shows how investor trust has eroded over time.
As trading activity slows down, the private sector’s involvement in the market has also weakened. Investors noted that a sustained lack of interest could damage the market further unless urgent steps are taken.
Call for Restoring Investor Confidence
The delegation urged the Governor to address these concerns in the upcoming monetary policy. They emphasized the need to rebuild trust in the capital market.
They said policy reforms must focus on creating a transparent and investor-friendly environment. According to them, if the government and central bank take corrective measures now, the market could quickly bounce back.
Four Major Recommendations Presented
The investor associations presented a set of four major suggestions they believe should be incorporated into the next monetary policy:
Remove the NPR 15 Crore Share Loan Limit
Currently, banks and financial institutions can offer up to NPR 15 crore as share-backed loans to individuals from a single family. Investors demanded that this ceiling be fully removed. They argued that lifting the limit would expand access to credit and boost investor morale.
Let Microfinance Firms Distribute Higher Dividends
Another issue involved the dividend distribution cap on microfinance institutions. At present, these institutions cannot distribute more than 15% dividend. Investors said this policy contradicts Nepal’s open economy principles.
They called for the removal of this restriction and asked for full operational independence for microfinance firms.
Revise Investment Limits for BFIs
The current rule limits how much banks and financial institutions can invest in the capital market based on their core capital. Investor groups urged NRB to revise this limit. They recommended following the Banks and Financial Institutions Act (BAFIA) 2073, which provides a more flexible framework.
Bring in NRN Investment by Amending Legal Barriers
Non-Resident Nepalis (NRNs) are willing to invest in Nepal’s capital market. However, existing laws prevent them from repatriating their profits. Investors described this as a serious obstacle.
They recommended legal reforms to remove this barrier and help create a more attractive environment for NRN investment. According to them, NRN funds could provide a much-needed boost to Nepal’s economy.
Positive Outlook with A New Leadership
Despite their concerns, the investor delegation remains hopeful. They believe Governor Paudel’s leadership could be a turning point. If the central bank listens to market stakeholders and adopts investor-friendly reforms, Nepal’s capital market could regain momentum.
They concluded the meeting by stressing the urgent need for collaboration between regulators and investors. A coordinated approach, they said, would help bring transparency, stability, and growth to the market.
For more:- Investors Demand NRB Policy Reforms
