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Government, NRB Positive to Remove Rs 120 millions' Threshold on Margin Lending

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Government, NRB Positive to Remove Rs 120 millions'  Threshold on Margin Lending

February 3:  Nepal government and Nepal Rastra Bank seem positive to remove the upper limit of Rs 120 million on loan against shares. In the fiscal year 2078/79, Nepal Rastra Bank(NRB) had tightened loans against shares by introducing the credit limit of Rs 40/120 millions. 

In the current fiscal year, the central bank had removed the limit of Rs 40 million on credit against shares. However, the central bank had kept the upper threshold on the margin loan unchanged. The central bank’s policy of Rs 40/120 million credit threshold against the shares had put the share market  in crisis.

At a programme organized by Economic Media Operators’ Association in Kathmandu on Thursday, Deputy Prime Minister and Finance Minister Bishnu Prasad Poudel and NRB Governor Maha Prasad Adhikari indicated that upper slab for margin credit might be removed. 

Poudel informed that Ministry of Finance, Nepal Rastra Bank and stakeholders could meet and discuss to find out a solution to 120 million slabs for the loans against shares.

“NRB Governor is positive to figure out solutions to the state of  liquidity, interest rates and a slab of Rs 120 million lending on shares,” Poudel said. He, however, added that the government could not dictate the central bank to change interest rates as it is an independent institution.

NRB governor Maha Prasad Adhikari said that temporary financial instruments used by the central bank for financial stability were being removed keeping in view the latest state of liquidity in the market. 

“Nepal Rastra Bank’s policies are clear and they will be changed in accordance with financial indicators,” Adhikari stated. He held that Rastra Bank had tightened loans against shares, polices on the import, among others, to avert the possible financial crisis in the country. 

NRB, through its Monetary Policy of 2021/22, had capped loans to up to Rs 40 million from a single bank or financial institution and the total limit for a borrower at Rs 120 million from different banks and financial institutions. In the current fiscal year, the central bank removed the lower limit on loans against shares.

 

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