Margin Lending up by 4 Percent

July 12: Margin lending of banks and financial institutions (BFIs) has amounted to Rs 39.19 billion by the end of 11 months of current fiscal year 2016/17. According to statistics of Nepal Rastra Bank (NRB), the amount is two percent of the total loans of BFIs. NRB data shows that loans of BFIs have totaled Rs 1.967 trillion by the end of 11 months of current FY.

As per the central bank, there has been fluctuation in margin lending since mid-April and such loans have increased by four percent compared to corresponding period of last FY.

Although the margin lending has increased, the proportion of lending has remained almost the same. In the last FY, margin lending was 2.24 percent of the total loans of BFIs. During the last FY, BFIs had loaned out Rs 37.68 billion as margin lending out of the total lending of Rs 1.682 trillion.

The monetary policy unveiled by NRB on July 9 allows BFIs to release only 40 percent of loan by keeping shares as collateral. Earlier, BFIs could release loan equal to the share amount.

NRB’s Research Department’s Acting Director Nara Bahadur Thapa informed that the ceiling of margin lending had been reduced keeping in view the rise in paid-up capital of BFIs.

“The paid-up capital has increased so the ceiling won’t affect margin lending,” said Thapa.