Share-Backed Lending by BFIs Doubles to Rs 167.85 Billion in Three Years
Loans against shares as collateral issued by banks and financial institutions in Nepal have surged to Rs 167.85 billion as of mid-September 2024, more than doubling from Rs 91.32 billion three years ago. Despite stock market volatility, commercial banks alone account for Rs 144.46 billion of this total, marking an 18.7% year-on-year increase.
KATHMANDU, Oct 14 — Banks and financial institutions (BFIs) in Nepal have aggressively expanded lending against shares as collateral, with total disbursements reaching Rs 167.85 billion as of mid-September this year, according to data from Nepal Rastra Bank (NRB).
The figure represents a more than doubling over the past three years. As of mid-September in Fiscal Year 2023/24, the cumulative amount of margin nature loans stood at Rs 91.32 billion, compared to just Rs 76.53 billion three years prior.
Despite significant volatility in the country's stock market, share-backed lending has continued its upward trajectory. The breakdown by institution type reveals:
- Commercial banks: Rs 144.46 billion, up 18.7% from Rs 121.70 billion in mid-September last year
- Development banks: Rs 19.78 billion
- Finance companies: Rs 3.60 billion
The sustained growth in margin lending comes amid broader caution in the banking sector, where many institutions are prioritizing loan recovery as the fiscal year progresses. The trend underscores both the appetite for equity exposure among borrowers and the willingness of BFIs to extend credit against volatile assets.