According to the Guidelines on Margin Transaction Facility enforced by the Securities Board of Nepal (SEBON), eligibility for margin trading requires strict compliance with policy indicators. These include a minimum of 2.5 million units of ordinary shares issued to the general public, a net worth equal to or exceeding the paid-up capital, consistent net profits over the last three financial years, and at least two years elapsed since the initial public offering (IPO) listing.
Market watchdogs and investors point out that heavily traded high-value entities—such as Rastriya Beema Company, Bishal Bazaar, Nepal Reinsurance Company, and Upper Tamakoshi—fail to meet these mandatory prerequisites.
Governance Lags and Low Free Float Drive Ineligibility
Financial analysts note that the soaring market prices of these companies do not necessarily reflect robust financial health or sound corporate governance. Instead, analysts attribute the inflated valuations largely to a constrained supply of tradable shares and low public float, which disproportionately influences the NEPSE index.
Key issues holding these stocks back from margin facilities include:
-
Delayed General Meetings and Audits: Several companies have failed to conduct annual general meetings (AGMs) for years, leaving investors in the dark regarding financial statements, audit reports, and dividend distribution plans.
-
Insufficient Public Shares: Companies like Rastriya Beema Company and Bishal Bazaar have severely limited shares in the hands of the general public (only around 326,629 units and 418,967 units, respectively), creating artificial scarcity and high volatility.
-
Weak Financial Indicators: While entities like Nepal Reinsurance and Upper Tamakoshi possess larger total share volumes among the public, their recent profitability has remained under pressure or negative, disqualifying them from regulatory thresholds.
Mixed Scenario Across State-Backed Enterprises
Out of 281 companies currently listed on the Nepal Stock Exchange (NEPSE), roughly 122 are approved for margin transactions.
The restriction does not apply blanket-wide to all state-owned enterprises. Several prominent government-invested corporations—including Nepal Bank, Agricultural Development Bank, Nepal Telecom, Salt Trading Corporation, Citizen Investment Trust, Chilime Hydro Power, and Hydroelectricity Investment and Development Company—successfully meet regulatory frameworks and feature varying levels of accessibility.
Among state-owned and affiliated entities, Rastriya Beema Company and Salt Trading Corporation record some of the highest per-share values, trading at approximately Rs 14,300 and Rs 5,582, respectively. Other notable prices include Bishal Bazaar at around Rs 4,009, Citizen Investment Trust at Rs 1,748, Nepal Telecom at Rs 925, and Nepal Reinsurance at Rs 824.90.
Investor Frustration Over "White Elephant" Stocks
Investors have expressed growing frustration over the paradox of high-priced government stocks failing to deliver dividends or margin loan facilities. Market participants argue that the lack of accountability, transparency, and timely AGMs transforms these high-value stocks into superficial assets that offer little practical advantage during sluggish market cycles.
Regulators have reiterated that margin facility approvals are determined strictly by objective financial health, regulatory compliance, and governance standards rather than state ownership status or secondary market price tags.
