July 06, Kathmandu.
Meanwhile, Nepal Rastra Bank is preparing monetary policy. Stakeholders are also giving their suggestions.
At present, development banks, finance companies and microfinance institutions are in favour of increasing their capital, while commercial banks are not open about it.
Stakeholders in the sector have been watching the monetary policy to be brought by the National Bank of Nepal with great interest. Share investors are now expecting a 'soft policy', says Chhotelal Rauniyar, chairman of the Nepal Investors Forum.
"There's a kind of panic in the market right now, newcomers are terrified," said Chairman Rauniyar.
The regulatory body of the capital market sector is the Nepal Securities Board. The board has also been formulating a separate policy on the capital market for the coming fiscal year. According to Bhishma Raj Dhungana, chairman of the board, the board is currently preparing the next policy. Suggestions are being collected and the policy will be made public soon, he said.
Moreover, what can be done for the capital market sector in the next four years is also planned, says Chairman Dhungana. This also means a lot in the capital market. The Securities and Exchange Board of Nepal (SEB) had named 51 companies and said that they were risky companies for investment. The Nepse index, which has reached over 3,000, is now between 28 and 19 hundred after the board's move.
Not only the steps of the board but also the monetary policy plays an important role in the volatility of the share market. Therefore, the current monetary policy is expected to make things easier, says Rauniyar, chairman of the forum. At present, the margin lending to invest in share pledges is 70 percent. He said that his demand was to keep it as it is.
NRB has made an arrangement to calculate the value of 180 days and calculate the average when giving a loan on a share pledge. Chairman Rauniyar said that it should be reduced. He said that the banks and financial institutions have been demanding capital increase recently and the NRB should take it positively.
"The microfinance association's suggestion that the rights should be allowed to be issued is also good. The bank should increase its capital and go for mergers and acquisitions," he said. He said that it would be better to give opportunities to the companies with less capital to increase their capital.
Share investor Durga Tiwari says it would be better for the MFI to take a policy to increase its capital. He demanded that the upcoming monetary policy should be capital market and investor-friendly as the market is in a very awkward situation.
Radha Pokhrel, president of the Nepal Capital Market Investors Association, also said that monetary policy should be made to remove the panic in the market. She said that investors have expected six things from the monetary policy for the coming fiscal year.
Firstly, the margin lending limit should be kept the same, secondly, banks and financial institutions should be encouraged to merge with each other and thirdly, the association expects to emphasize bonus shares as an incentive to increase the capital of banks and financial institutions.
Similarly, the limit for repaying interest on margin loans should be increased by mid-January 2018, the interest rate on margin loans should not be increased and monetary policy should make some provision for issuing broker license to the bank's subsidiary, said Pokharel. "If these measures are included in monetary policy, the market will pick up speed and the economy will benefit," she said.
Demand from merchant bankers
Merchant bankers who do all the necessary work related to the issuance and sale, distribution and management of securities have their own demands. Merchant banks have not suggested the banking sector to the Nation Banks as they have only got permission from the Securities and Exchange Board and are only doing work related to the capital market.
"Our regulatory body is the Securities and Exchange Board. The policy that the board makes is important to us," said Mekh Bahadur Thapa, president of the Merchant Bankers' Association. "But we expect monetary policy to make some arrangements."
Chairman Thapa said that the forthcoming monetary policy should encourage banks and financial institutions to use the 'portfolio management' service approved by the Securities and Exchange Board of India (SEBI) subject to various prescribed conditions when investing in securities.
According to him, banks and financial institutions should make clear arrangements for investing in private equity and venture capital funds approved by the Securities and Exchange Board of India.
Merchant banks are a subsidiary of banks and financial institutions. These organizations have been working on share issue management, share register, underwriting and investment management.
