Large-Value Margin Loans Surge after NRB Lifts Cap

Large-value margin lending—loans secured by shares—has surged sharply after Nepal Rastra Bank (NRB) removed limits on such loans four months ago. Analysts say banks are looking to expand credit in this segment amid weak demand in other sectors.

According to NRB data, banks and financial institutions had extended Rs 148.78 billion in share-backed loans (margin lending) by mid-December of the current fiscal year 2025/26, showing a steady increase since the cap was lifted in late September. Compared with mid-July, total margin lending rose by 5.7 percent, with the fastest growth recorded in loans ranging between Rs 5 million and Rs 10 million, which jumped 11.7 percent.

During the same period, loans below Rs 2.5 million grew by 4.1 percent, while lending between Rs 2.5 million and Rs 5 million increased by 6.7 percent, highlighting a clear shift toward higher-value borrowing.

NRB removed the Rs 2.5 million ceiling on individual margin loans in late September, adopting a more accommodative policy to stimulate credit growth. The central bank had already scrapped the cap for institutional investors earlier in July 2024.

“With excess liquidity in the financial system and interest rates at low levels, banks have prioritized margin lending at a time when demand for other types of credit remains weak,” a senior banking official said.

An NRB executive director noted that the central bank’s earlier policy discouraging share-backed lending did not last even four years. “With overall credit demand slowing, banks have at least found short-term measures to expand lending,” the official said.

The central bank first imposed limits on margin lending in the monetary policy of 2021/22, citing the need to reduce risk and expand access for small investors. Under the policy, an individual or institution could borrow a maximum of Rs 40 million from a single financial institution and Rs 120 million from the entire financial system.

Following the policy, banks largely stopped issuing large-value margin loans, with growth confined to smaller loans. The limits, however, drew strong opposition from investors, who staged protests against then-governor Maha Prasad Adhikari and exerted pressure through the finance ministry and parliamentary committees.

Gradually retreating from the restrictions, NRB removed the Rs 40 million per-institution cap in the monetary policy of 2022/23, while setting an overall ceiling of Rs 120 million for individual investors and Rs 200 million for institutional investors. The cap for institutional investors was fully removed in 2024/25, followed by the scrapping of limits for individuals in September 2025.

NRB data show that after the caps were first introduced, loans exceeding Rs 10 million fell by 39.15 percent, even as smaller loans grew by around 10 percent. Since the restrictions were lifted, however, the trend has reversed. Within a year of removing the cap for institutional investors, margin loans above Rs 10 million doubled. A similar pattern is now emerging among individual investors, particularly in the Rs 2.5 million to Rs 10 million range.

Investor Ambika Paudel said the removal of lending limits has made margin loans more accessible. “The cap has been lifted and interest rates are low,” said Paudel. “This makes it easier for investors to borrow and invest in the market, while also giving banks an opportunity to expand lending.”