Investors Submit Joint Memorandum to Nepal Rastra Bank Over Market Decline

Kathmandu – Investor representatives have submitted a joint memorandum to Nepal Rastra Bank (NRB), highlighting the sharp decline in the Nepal Stock Exchange (NEPSE) and urging immediate policy reforms to restore confidence in the capital market.

On Ashwin 2, the first trading day after recent political disruptions, NEPSE experienced nearly a 2 percent circuit break, with transactions worth Rs. 720 million and a drop of more than 19 points in the benchmark index. Market capitalization declined by nearly Rs. 2 trillion, causing fear and frustration among investors.

Citing past shocks such as the 2006 People’s Movement, the 2015 earthquake, and the COVID-19 crisis, the memorandum emphasizes that lack of precautionary measures repeatedly exposes small investors to significant losses when markets reopen.

Key demands from the memorandum include:

1. Enable banks and financial institutions (BFIs) to participate in the secondary market for smoother liquidity.

2. Remove the Rs. 250 million single obligator limit on share-backed loans.

3. Revise the 25% dividend cap for microfinance institutions to allow payouts based on real profits and financial capacity.

4. Review BFI investment limits in the stock market in line with the Bank and Financial Institution Act (BAFIA) 2072.

5. Update share loan ceilings to match current market conditions.

6. Facilitate Non-Resident Nepali (NRN) investment by simplifying repatriation procedures and regulations.

The memorandum was signed by Chotelal Rauniyar, senior investor; Tara Phulell, Share Laganikarta Sangh Nepal; S.P. Chaulagain, Nepal Pujibajar Laganikarta Sangh; and Dillishwor Karki, Swatantra Pujibajar Laganikarta Sangh.

The investors stressed that NRB’s proactive role is crucial for a transparent, investor-friendly environment. Timely reforms, they argue, will not only stabilize NEPSE but also contribute to sustainable growth in Nepal’s economy.