Interest rates are continuously falling and demand for loans is very low. That is why banks are now urging equity investors to take out loans.
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In the first six months of the current fiscal year alone, banks and financial institutions have disbursed an additional Rs 12.12 billion in share loans. This is 8.6 percent more than in the same period of the previous fiscal year.
The loan flow under this heading this year is less than the loan flow in the same period last year.
The growth rate of share loans increased by 26.3 percent in the first month of the last fiscal year. Share loans have been increasing since the beginning of the current fiscal year. But the growth rate of share loans is low. However, the stock market has not been able to grow in proportion to the increase in share loans. NEPSE, which fell for four days last week, fell on both trading days this week. In the past few months, the stock market has seen a trend of increasing on most days and increasing only on a few days.
Stock brokers say that even though share loans have increased, their positive impact has not been seen in the NEPSE index as more money has come in the name of share loans, as share sales, capital gains tax, and there is no mandatory provision to invest loans taken as collateral in the purchase of shares. ‘It seems that share loans have increased in recent months, so the demand for shares should increase in the market, but that is not the case,’ said a broker, ‘The overall NEPSE has not been able to grow as expected because the demand for shares has not increased in line with the increase in loans.’
According to the data of the Nepal Rastra Bank, share loans between 25 and 50 lakh rupees have increased by 10.4 percent and loans below 25 lakh rupees have increased by 7.3 percent till last Poush. Loans above 10 crore rupees have increased by 7.9 percent and loans between 50 lakh and 10 crore rupees have increased by 11.8 percent during the same period, according to the monthly report of the Nepal Rastra Bank.
As of Poush 2081, loans below 25 lakh rupees had increased by 8.1 percent, loans between 25 and 50 lakh rupees had increased by 11.9 percent and loans between 50 lakh and 10 crore rupees had increased by 14.9 percent. Similarly, in the first six months of the last fiscal year, loans above 10 crore rupees had increased by 34.9 percent, according to the data of the Nepal Rastra Bank. There has been excess liquidity in the financial system for the last three years.
While interest rates are continuously falling, the demand for loans is very low. That is why banks are now urging stock investors to take loans. The data of the Nepal Rastra Bank shows that small investors have also taken loans from banks. However, experts say that investors are confused as to why the market has not increased.
Looking at history, it is generally seen that the NEPSE increases during parliamentary elections. However, this time the election did not see a surge in the stock market. Brokers say that the election results are difficult to predict, that the party that forms the government will not work for market development, that investment in other sectors of the economy has not increased, and that the economy has not become dynamic as expected due to the failure to increase government spending.
After the political changes in Nepal in 2046, parliamentary elections have been held in Baisakh 2048, Kartik 2051, Baisakh 2056, Chaitra 2064, Mangsir 2070, Mangsir 2074 and Mangsir 2079. Local body elections were held in 2049 and 2054 and local level elections in 2074 and 2079. Among them, the stock market has increased in the parliamentary and local body elections since Baisakh 2056.
However, almost all policies are now favorable for the growth of the stock market. In the same process, last Asoj, the Rastra Bank had removed the maximum limit of 250 million on individual share loans. Before that, the maximum single customer loan limit for margin loans against share collateral from any one or all banks and financial institutions was 250 million. These policies have also not seen a sustainable positive impact on the stock market.
