Nepal Rastra Bank Tightens Rules on Share Pledging: Which Listed Companies Are Ineligible for Margin Loans?
Nepal Rastra Bank's Unified Directives 2082 bar loans against shares of listed companies that are problematic, have negative net worth, are delisted, lack audits or AGMs, or fail trading thresholds. A sector-wise assessment reveals ineligible firms across development banks, finance, hotels, hydropower, life insurance, manufacturing, and microfinance, while commercial banks and investment companies remain fully eligible.
Nepal Rastra Bank (NRB) has issued strict regulatory criteria determining which listed companies' equity shares can be pledged as collateral for bank loans. Under the Unified NRB Directives, 2082, banks and financial institutions (BFIs) are prohibited from granting credit against shares of companies that fall into any of the following categories:
- Declared problematic by a bank or financial institution, or failing to maintain the prescribed capital adequacy ratio (CAR).
- Suffering from negative net worth.
- Delisted by the Nepal Stock Exchange Limited (NEPSE).
- Have not completed the final audit for the previous fiscal year within one year of that year's end.
- Incurred continuous losses over the last three fiscal years.
- Have not completed one year since commencing commercial operations.
- Have not held an Annual General Meeting (AGM) for the last three years.
- Shares have not been traded for 250 days.
A thorough assessment using recent disclosures from NEPSE and company websites identified ineligible listed companies sector by sector.
Commercial Banks: All listed commercial banks meet the eligibility criteria for loans against shares.
Development Banks: Among seventeen listed development banks, two are ineligible:
- Karnali Development Bank Ltd. (KRBL) – declared problematic by NRB.
- Salapa Bikash Bank Ltd. (SABBL) – failed to meet the 250-trading-day threshold.
Finance: Among fourteen listed finance companies, one is ineligible:
- Janaki Finance Company Ltd. (JFL) – negative net worth.
Hotel & Tourism: Among eight listed hotels and tourism companies, three are ineligible. (Specific names were not provided in the original disclosure.)
Hydropower: Among one hundred eleven listed hydropower companies, thirty-six are ineligible. (Specific names were not provided in the original disclosure.)
Investment: All listed investment companies meet the eligibility criteria.
Life Insurance: Among fourteen listed life insurance companies, one is ineligible:
- Crest Micro Life Insurance Limited (CREST) – AGM/audit pending for FY-2081/082.
Manufacturing & Processing: Among nineteen listed manufacturing and processing companies, nine are ineligible. (Specific names were not provided in the original disclosure.)
Microfinance: Among fifty listed microfinance companies, nine are ineligible:
- Dhaulagiri Laghubitta Bittiya Sanstha Limited (DLBS) – CAR below 8%.
- Mahila Laghubitta Bittiya Sanstha Limited (MLBSL) – CAR below 8%.
- Manushi Laghubitta Bittiya Sanstha Limited (MLBS) – CAR below 8%.
- Matri Bhumi Laghubitta Bittiya Sanstha Limited (MATRI) – CAR below 8%.
- NIC Asia Laghubitta Bittiya Sanstha Limited (NICLBSL) – CAR below 8%.
- Samudayik Laghubitta Bittiya Sanstha Limited (SLBSL) – CAR below 8%.
- Shrijanshil Laghubitta Bittiya Sanstha Limited (SHLB) – AGM/audit pending for FY-2081/082.
- Swastik Laghubitta Bittiya Sanstha L – (reason truncated in original disclosure).
Investors and borrowers should verify a company's eligibility before pledging shares as collateral, as non-compliance can lead to loan rejection or regulatory penalties for BFIs.