Announced by the Ministry of Finance, the "Capital Market Consolidation and Revitalization Action Plan, 2083 BS" shifts focus beyond traditional share trading toward modern financial instruments, institutional participation, tax relief for long-term investors, and structural enhancements.
Modernizing Instruments and Primary Markets
To foster a market-based financial system, the government is prioritizing the development of corporate bonds, money markets, and Exchange-Traded Funds (ETFs), alongside specialized instruments like green, social, disaster, and project-specific bonds by mid-October 2083.
The Securities Board of Nepal (SEBON) has been directed to immediately issue guidelines for Initial Public Offerings (IPOs). Sector-specific qualifications, price discovery systems, and modern securities allocation frameworks for hydropower, tourism, agriculture, and pharmaceutical industries are slated for implementation by Poush end, 2083. Additionally, mutual funds will undergo structural changes to establish them as robust pillars of long-term investment.
Regulatory Updates and NEPSE Restructuring
The action plan outlines vital legal reforms through amendments to the Securities Act, 2063 BS, laying the groundwork for advanced trading instruments such as margin lending, inter-day trading, securities lending, and short selling.
The Nepal Stock Exchange (NEPSE) is set for institutional strengthening and structural restructuring based on a historical task force report. While the current NEPSE index will remain as the "All Equity Index," a new "Benchmark Index" based on tradable shares, market liquidity, and corporate governance will launch by Mangsir end, 2083. Furthermore, a proposal to integrate Non-Resident Nepalis (NRNs) into the secondary market will be submitted to the Council of Ministers by Ashoj end 2083.
Attracting Institutional Investors and Tax Relief
To rebalance massive capital reserves currently concentrated in bank deposits, the government is paving the way for institutional investors—including the Employees Provident Fund, Citizen Investment Trust, Social Security Fund, and insurance companies—to enter both primary and secondary markets actively. SEBON and Nepal Rastra Bank (NRB) will jointly review investment limits, risk weights, and collateral provisions for banks and financial institutions by Kartik end, 2083.
In a significant boost for long-term investors, the capital gains tax (CGT) system has been revised. Natural persons holding shares for more than 365 days will benefit from a lowered tax rate of 3.75%, while shorter holdings will be taxed at 5%. A framework to adjust trading losses against gains within the same income year is also under study.
Enhancing Market Infrastructure
The reform package encompasses several additional recovery measures, including upgrading the capacity of CDS and Clearing Limited, establishing a clear regulatory framework for private equity and venture capital (PE/VC) by mid-January 2083, and introducing provisions for share splits and share buybacks by listed corporate entities.
The Ministry of Finance anticipates that these sweeping measures will successfully mitigate economic pressures, enhance transparency, and foster a secure, technology-friendly ecosystem for investors across Nepal.
