Share-Backed Lending Rises 8.3% in Six Months, Total Investment Crosses NPR 152 Billion

Share-backed (margin) lending in Nepal has recorded a notable increase during the first six months of the current fiscal year 2080/81 (up to mid-January), according to the latest financial data released by Nepal Rastra Bank. The total volume of margin loans provided by banks and financial institutions has risen by 8.3 percent to exceed NPR 152.40 billion. In the last six months alone, margin lending increased by NPR 11.70 billion. Although this growth rate is lower than the 26.3 percent recorded in the same period of the previous fiscal year, the overall size of margin loans has reached a historic high.

The data shows that large investors continue to dominate the share-backed lending market. Loans exceeding NPR 10 million account for nearly 70 percent of total margin lending, amounting to over NPR 106 billion by mid-January. However, participation from mid-level and small investors has also been steadily improving. The highest growth rate of 12.8 percent was observed in loans ranging from NPR 5 million to NPR 10 million, while loans between NPR 2.5 million and NPR 5 million increased by 10.3 percent. Improved liquidity in the banking system, declining interest rates, and regulatory flexibility introduced through monetary policy have encouraged investors to use share-backed loans for stock market investment. While this trend has supported market liquidity and trading volume, analysts caution that excessive concentration of credit among large investors could increase market risk for smaller participants.