In a letter addressed to the NRB Governor, the association highlighted that despite ample liquidity in the banking system and declining interest rates, private sector investment has failed to expand. Urging the central bank to treat the capital market as a true mirror of the economy, the association demanded crucial policy reforms to boost investor morale.

Key Demands Placed by the Association:

• 1. Review of Share Mortgage Loans:

  The association has called for the share loan calculation method to be revised, suggesting the average share value be based on 120 days instead of the current 180 days. Additionally, they demanded increasing the loan-to-value (LTV) ratio from 70% to 80% and reducing the risk weightage for high-quality listed companies.

• 2. Incentives for Institutional Investment:

  To encourage long-term investments, the association urged the NRB to create a more favorable environment for commercial banks, insurance companies, mutual funds, and pension funds. Specifically, they requested that banks and financial institutions (BFIs) be allowed to invest up to 30% of their primary capital in the secondary market.

• 3. Relief for Microfinance and Capital Adequacy:

  The proposal stresses lifting the "impractical restrictions" placed on microfinance institutions regarding share investments. It also suggests allowing low-capital companies struggling with capital adequacy ratios to easily issue right shares to raise funds.

• 4. Recognition as a Primary Sector:

  The central bank has been urged to formally recognize the capital market as a primary sector of the economy, highlighting its vital role in mobilizing capital toward production, energy, tourism, and infrastructure.

• 5. Policy Facilitation for Non-Resident Nepalis (NRNs):

  To attract investment from hundreds of thousands of NRNs living abroad, the association recommended simplifying policy hurdles. This includes streamlining online KYC verification, demat account operations, and the repatriation of profits.