During the first two months of the current fiscal year, such loans grew by Rs 1.34 billion, or 0.8 percent, up from Rs 166.50 billion recorded in mid-July. However, the growth rate has slowed down compared to the same period in the previous fiscal year 2082/84, when margin loans had expanded by Rs 4.90 billion, or 3.5 percent.
Despite the moderate overall credit expansion, the data reveals a significant shift in loan size distribution. While large loans exceeding Rs 10 million saw steady growth, all categories of small and medium loans below Rs 10 million declined during the review period.
According to NRB officials, this trend is primarily driven by the margin lending facilities introduced directly by securities broker companies. Currently, 14 brokerage firms are providing margin lending services in the secondary market. These companies borrow in bulk from BFIs—typically loans exceeding Rs 1 crore—and extend margin facilities directly to retail and institutional investors.
"Investors can now easily get margin facilities up to Rs 1 crore directly from broker offices while purchasing shares, bypassing the lengthy documentation and bureaucratic processes associated with traditional banking," a senior NRB official explained. Because these wholesale loans taken by brokers are categorized under loans above Rs 1 crore, banking statistics reflect an increase in large loans and a corresponding decrease in smaller retail bank loans.
Breakdown of Loan Categories
-
Loans Above Rs 10 Million: Large margin loans grew by Rs 2.09 billion (1.7 percent) to reach Rs 121.54 billion, up from Rs 119.45 billion in mid-July. This segment now accounts for 72.41 percent of the total margin loan portfolio. In the corresponding period of the previous year, large loans had increased by Rs 3.39 billion (3.4 percent).
-
Loans Ranging from Rs 5 Million to Rs 10 Million: This category decreased by Rs 313.8 million (1.6 percent) to settle at Rs 18.84 billion, compared to Rs 19.15 billion in mid-July. During the same period last year, this bracket had witnessed a robust growth of 11.7 percent.
-
Loans Ranging from Rs 2.5 Million to Rs 5 Million: Loans in this tier dropped by Rs 196.3 million (1.0 percent) to Rs 18.65 billion, down from Rs 18.85 billion.
-
Small Loans Below Rs 2.5 Million: Retail loans taken by small investors registered the steepest decline, falling by 2.6 percent. These loans dropped by Rs 237.4 million, moving from Rs 9.04 billion in mid-July down to Rs 8.80 billion.
In total, loans across all three categories below Rs 1 crore contracted by Rs 747.5 million during the review period. Experts note that this decline does not indicate small investors leaving the stock market; rather, it highlights a structural migration from traditional bank financing to broker-led financing. The availability of instant loan facilities through brokers indicates that margin trading in Nepal's capital market is increasingly aligning with international, broker-centric practices.
