The Employees Provident Fund, Citizens Investment Fund and Social Security Fund have opened the way for investment in collective investment funds, private equity funds, venture capital funds, etc. The government has opened the way for investment in collective investment funds, private equity funds, venture capital funds, etc. to the mentioned institutions through an ordinance made to amend some Nepal Acts. 

For this, the government has amended the Employees Provident Fund Act, Citizens Investment Fund Act and Contribution-Based Social Security Fund Act through an ordinance. ‘Investment in securities units of collective investment funds, private equity funds and venture capital funds approved by the Securities and Exchange Board of Nepal,’ it is mentioned in the ordinance made to amend some acts. 

The mentioned funds can invest in specified sectors, projects and institutions. But not much investment has been made in the productive sector. On average, about 50 percent of the amount with these funds is invested in fixed deposits and the rest in government bonds, treasury bills, development bonds, and collective investment funds. In recent years, due to the continuous accumulation of excess liquidity (loanable funds) in the market, banks and financial institutions have not shown interest in institutional deposits.

A large amount of such funds remains in fixed deposits, but their income has also decreased due to low interest rates on deposits. At such a time, the government has also opened the way for investment in securities, including collective investment funds, which are relatively low in risk. Experts say that the new system will allow funds from the funds to be utilized, while on the other hand, the capital market will also get institutional investors.

However, experts suggest that investment decisions should be made only after adequate research and risk analysis, as investment in the capital market is risky compared to other sectors. Raman Nepal, former executive director of the Citizens Investment Fund, argues that the government has done well by allowing such companies to enter the capital market. ‘This was very necessary in the context of the Citizens Investment Fund.

Because the funds had very few investment sources. But you should do a lot of research and study on the securities and the related company you are investing in and assess the risk based on that,' he said, 'Since investing on the basis of impulsiveness involves risks, it is good for the company and the overall capital market if you make an investment decision after doing sufficient research before investing.' 

Since Provident Fund, Citizens' Investment Fund and Social Security Fund are institutional investors, when their investments come to the capital market, it is in the interest of both the relevant company and the market, said Neeraj Giri, former executive director of the Nepal Securities Board. 'Institutional investors do not make investments on the basis of impulsiveness, they only make investment decisions after calculating the profit and loss after sufficient research,' he said, 'Institutional investment is not like individual investment. Since the responsibility and liability of the institution are greater, the risk is less.' 

Giri said that the argument that securities are more risky because there is risk in any sector of investment is not correct. ‘Wherever there is risk in investment, it is only minimal, so there is no need to be afraid of the risk,’ he added, ‘there is a lot of benefit in making investment decisions after analyzing the risks adequately.’ He argues that at a time when such organizations are mostly earning interest by keeping their money in fixed deposits with banks and financial institutions, this decision of the government has paved the way for the use of funds by those companies.