Speaking at a recent meeting of the House of Representatives' Finance Committee, Acharya argued that while the policy successfully introduced small investors to the capital market, it has inadvertently fostered a culture of short-term speculation rather than sustainable, long-term investing.

The Pitfalls of the 10-Unit Policy: Speculation Over Investment

Acharya highlighted that the current system mirrors a lottery rather than an informed investment process. The majority of the public applies for IPOs via the 'Mero Share' app without researching the underlying companies or reading their prospectuses.

Key issues raised regarding the current market behavior include:

• Lack of Financial Literacy: Investors are overwhelmingly focused on short-term price appreciation—expecting investments to double or triple quickly—rather than evaluating company dividends or long-term growth.

• Dormant Demat Accounts: Out of the estimated 70 to 80 lakh (7–8 million) Demat accounts opened in Nepal, a massive portion remains entirely inactive, mirroring dormant account trends in the banking sector.

• Absence of Corporate Engagement: Small investors holding only 10 units rarely track company performance or attend Annual General Meetings (AGMs).

• Regulatory & Governance Challenges: Irregularities in the IPO process and a tendency for investors to agitate when market prices drop underscore the need for stringent regulatory reforms.

The Proposed Solution: Acharya suggested that small or novice investors should be guided toward mutual funds instead of direct equity IPOs. This shift would ensure their capital is managed by professionals, mitigating individual risk and stabilizing the market.

Nepal Nears Exit from FATF Grey List

In the same committee meeting, Acharya shared highly positive updates regarding Nepal's standing with the Financial Action Task Force (FATF). He stated that the country is on the verge of exiting the grey list due to significant legislative and regulatory progress.

Progress Highlights:

• Action Plan Upgrades: Out of the 15-point action plan handed down by the FATF, Nepal has achieved a status of "fully addressed" in four key areas following the latest FATF plenary meeting.

• Upcoming Assessment: Nepal is preparing to present its progress on the remaining 11 action items during the Asia Pacific Group on Money Laundering (APG) face-to-face meeting scheduled for September in Malaysia.

• Targeted Sectors: Current compliance and reform efforts are heavily focused on strengthening the supervision of regulatory bodies, including the Nepal Rastra Bank, the Securities Board of Nepal (SEBON), the Nepal Insurance Authority, as well as the cooperative and casino sectors.

• Legal & Structural Reforms: Government bodies are actively improving protocols surrounding beneficial ownership, asset confiscation, inter-agency case coordination, and high-profile financial crime prosecutions.

Acharya concluded on an optimistic note, asserting that if the current momentum in regulatory reforms and financial investigations is maintained, Nepal is well-positioned to successfully exit the FATF grey list in the near future.