Former Prime Minister Pushpa Kamal Dahal stopped the process of exchange in 2080 Baisakh, it is meaningful to come up with the issue of new exchange license along with the appointment of chairman.
The government has resumed the process of distributing new stock exchange licenses for private sector investment, which has been delayed for a long time due to disputes. About three weeks after the appointment of Santosh Narayan Shrestha as the chairman of the Nepal Securities Board, the government has started the process of proceeding with the license process of the new exchange.
The cabinet meeting held last Friday has decided to send the report of the study committee formed earlier to the Ministry of Finance regarding the issue of license for securities market operations. This decision of the Council of Ministers has been analyzed from different angles. Some have said that they will send the report to the Ministry of Finance and give instructions for implementation, while others have interpreted it as an attempt to set aside the report prepared by the committee formed by the decision of the Council of Ministers without implementing it themselves. However, many are looking at the new exchange license along with the appointment of a new chairman in the Securities Board as meaningful. However, the source said that the report has not been received at the Ministry of Finance by office time on Monday.
However, according to law, the government cannot grant licenses for new stock exchanges. That work belongs to the Nepal Securities Board. But the government can give directions. Earlier, since the government had stopped the process, the Securities Board did not proceed further with the new license of the exchange, saying that Fukua should also be released.
The then Prime Minister Pushpa Kamal Dahal gave instructions to stop the process in Baisakh 2080 after there was a strong protest on both the streets and the parliament saying that the license of stock exchange was manipulated to certain business houses. The MPs also protested in the parliament with the claim that there was financial manipulation while distributing the license to the stock exchange of private investment.
The Securities Board was being accused of proceeding with the licensing process 'in a middleman's setting'. This issue was also raised in the House of Representatives. The Prime Minister had instructed to stop the process saying that it is not appropriate to distribute new licenses to the private sector despite the presence of the Government Stock Exchange (NEPSE). Ramesh Hamal, the former chairman of the Securities Board, had started the license distribution process by making policy arrangements for the distribution of licenses of private stock exchanges. However, the process for distribution of new licenses started when Sher Bahadur Deuba was the Prime Minister and Janardan Sharma was the Finance Minister. Claiming that there is institutional corruption in the license distribution process, the parliamentarians have been demanding to stop it. The Securities Board had amended the 'Securities Market Operation Regulations, 2064' against the previous policy and international practice, in which private limited companies can also invest in the stock exchange. Previously, only banks, financial institutions, securities dealers and listed organizations could invest in the securities market. Private limited companies could not invest in the stock exchange. According to the previous provisions, no one company or organized organization can take more than 10 percent of the total share capital of the securities market.
Experts say that the board's decision to raise the investment limit to 15 percent in the stock exchange is against international practice. Former Chairman of Nepal Securities Board Revat Bahadur Karki says that since another exchange is needed to make the current NEPSE stronger and more competitive, the policy arrangement made for the new one is not right. "Now, private limited companies can also invest in exchange companies, which is not right," he said.
In the stock exchange of almost all countries of the world, a company can only invest up to 7 percent. Business houses often have investments in banks and financial institutions and insurance companies. When the same person is a banker and a businessman, there is a conflict of interest. This is why the National Bank has raised the voice that bankers and traders should be separated.
