According to the data of nine months of current FY, stock investment through margin loans are exceeding Rs 1 billion in monthly average.
As per the data of NRB, investors have utilized margin lending of Rs 480 million in the month of Chaitra. Similarly, they invested Rs 520 million in Falgun, Rs 1 billion in Magh and more than Rs 3 billion in Poush through margin lending.
In the last nine months, investors utilized Rs 9.65 billion worth of margin lending. In monthly average, investors are using Rs 1 billion worth of margin lending.
Banks and financial institutions (BFIs) that extended margin lending of Rs 73.30 billion by the end of the last FY have already extended margin lending of Rs 86.18 billion in the nine months period of the current FY.
Following the cap set by NRB in margin lending, such borrowing declined significantly in the past. Although NRB has not entirely removed the cap, it loosen up the cap to the some extent which encouraged investors for margin borrowing.
NRB, in the Monetary Policy of the current FY, set 100 percent weighted risks for margin lending up to Rs 5 million. In the first quarter review of Monetary Policy, the central bank reduced the weighted risks at 125 percent and also raise the limit for individuals at 150 million and institutions at Rs 200 million. Consequently, margin lending is increasing in the recent days.
