In recent time, the margin lending from banks is in a decreasing trend. By mid-April, banks extended margin lending loan of Rs 37.98 billion. Meanwhile, the banks have collective primary capital (paid-up capital plus reserve fund) of Rs 700 billion. Based on data, they extended nearly 6 percent of margin lending till the given date. The banks can extend up to 25 percent of their primary capital on margin lending. This means they have the capacity to extend nearly 90 billion in margin lending.
By mid-April, the banks extended total loan investment of Rs 2829 billion. Currently, the banks have not been able to expand their business due to the lockdown imposed by the government. The statistics of the Nepal Bankers Association also show that the loan extension of banks decreased by Rs 2 billion by the last week of June.
All of these circumstances have pushed the banking sector to expand its business in the stock market. However, hereto, they have not been able to grab the opportunity as the margin lending decreased by 0.20 percent in mid-April compared to mid-March.
Although the banking sector tried to increase the demand for the margin lending, it has not increased. This only proves that the banks will have to bring some attractive packages to attract the stock investors.
