The Share Investors Association of Nepal has officially submitted a five-point recommendation letter to the NRB Governor, urging major policy reforms to be integrated into the Monetary Policy for the fiscal year 2083/84.
According to the association's president, Tara Prasad Phulel, the central bank must prioritize making the capital market more robust, dynamic, liquid, and investment-friendly. The requested revisions target existing regulations governing banks, microfinance institutions, share collateral loans, Non-Resident Nepali (NRN) investments, and institutional fund mobilization.
The 5 Key Recommendations for Market Reform
- Flexibility in BFIs Investments: Grant banks and financial institutions (BFIs) greater regulatory flexibility for both short-term and long-term investments within the secondary market.
- Revised Microfinance Dividend Policy: Scrap the rigid dividend distribution ceilings for microfinance institutions. Instead, allow a market-oriented, practical approach based on actual financial health and accumulated profits.
- Share Mortgage Loan Reforms: Relax individual and institutional caps, as well as the risk-weighted averages on share mortgage loans, shifting instead toward a system determined by realistic market risk.
- Facilitating NRN Investments: Establish clear, hassle-free procedures that allow Non-Resident Nepalis (NRNs) to easily invest in the secondary market and repatriate their earned profits through a simplified process.
- Mobilization of Institutional Funds: Introduce policy trade-offs that encourage large institutional investors—such as the Citizen Investment Trust (CIT), Employees Provident Fund (EPF), Social Security Fund (SSF), and insurance companies—to actively inject and mobilize funds into the stock market to ensure long-term liquidity and stability.
