Kathmandu. Nepal Rastra Bank (NRB) has stated that it will set the limit of share mortgage loan on the basis of the strength of the institution.
The central bank has announced the fiscal year 2083. The annual monetary policy of the year 84 has mentioned the limit of share mortgage loans through a special policy provision. This issue mentioned in the monetary policy has rippled the stock market. However, the recommendations sent by market relations stock brokers and investors’ associations to the NRB were not included in the monetary policy. This has further lowered investor morale.
Share Investors Association of Nepal Acting President Tara Prasad Phulel said the monetary policy has given priority to risk-based valuation rather than the old practice of keeping all companies on the same standard in share collateral. “This will create an environment where credit flow will be easy for companies with strong financial position, good governance and transparency while excessive fluctuation in companies with weak base will be controlled,” he said, adding that such arrangement is expected to attract investment to quality companies and motivate the market to move ahead on the basis of the real financial condition of the company rather than the rumor and rumors. ’
In the long run, Fullell argues that this policy arrangement will strengthen market credibility, institutional investor participation and financial stability. “The policy can be taken as positive steps towards making Nepal’s capital market more mature, transparent and sustainable through healthy competition, prudent credit flow and development of quality investment culture,” he said.
Prem Wali, an active investor, says that the issue of determining the limit of share mortgage loan on the basis of the strength of the company will not affect the market much. This policy makes the market more robust and disciplined.
Oli said that the reason for the market failure to gain momentum is that any suggestions sent by investors and stock brokers should be included in the monetary policy. “Investors’ associations and stock brokers had submitted recommendations to the NRB for the monetary policy for capital market reform and development. As a result, investors have lost confidence. ’
According to Oli, the government and regulatory bodies should take initiative to improve the market. “Thinking everything is fine can be fatal for the market,” he said.
