Nepal Rastra Bank (NRB) stipulates regulatory criteria governing the eligibility of listed companies whose equity securities may be pledged as collateral to secure credit facilities from banks and financial institutions.
As per requirement of Unified NRB Directives, 2082 under following circumstances, loans shall not be granted against the shares of listed institutions:
In accordance with the Unified Directives issued by Nepal Rastra Bank (NRB) to Banks and Financial Institutions, a thorough assessment was conducted using recent disclosures published on the Nepal Stock Exchange and individual company websites to identify ineligible listed companies. Below is a sector-by-sector breakdown of the assessment:
Commercial Bank: All companies listed under the Commercial Banking sector meet the eligibility criteria for loans against shares.
Development Bank: Among seventeen companies listed under Development banking sector, following two companies does not meet the criteria for availing loan against share:
Declared as problematic institution by NRB
Minimum threshold of 250 trading days not complied.
Finance: Among fourteen companies listed under Finance sector, following one company does not meet the criteria for availing loan against share:
Hotel & Tourism: Among eight companies listed under Hotel & Tourism sector, following three companies does not meet the criteria for availing loan against share:
Continuous loss for 3 consecutive years
Bandipur Cable Car and Tourism Limited
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Hydropower: Among one hundred eleven companies listed under Hydropower sector, following thirty six companies does not meet the criteria for availing loan against share:
Minimum threshold of 250 trading days not complied.
Continuous loss for 3 consecutive years
Continuous loss for 3 consecutive years
Bhugol Energy Development Company Limited
Continuous loss for 3 consecutive years
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Dibyashwari Hydropower Company Limited
Continuous loss for 3 consecutive years
Commercial operations have not yet commenced
Minimum threshold of 250 trading days not complied.
Himal Dolakha Hydropower Company Limited
Continuous loss for 3 consecutive years
Joshi Hydropower Development Company Limited
Continuous loss for 3 consecutive years
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Khani Khola Hydropower Company Limited
Continuous loss for 3 consecutive years
Minimum threshold of 250 trading days not complied.
Continuous loss for 3 consecutive years
Continuous loss for 3 consecutive years
Mount Everest Power Development Limited
Minimum threshold of 250 trading days not complied.
Rapti Hydro & General Construction Limited
Continuous loss for 3 consecutive years
Rasuwagadhi Hydropower Company Limited
Continuous loss for 3 consecutive years
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Continuous loss for 3 consecutive years
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Taksar Pikhuwa Khola Hydropower Limited
Minimum threshold of 250 trading days not complied.
Trishuli Jal Vidhyut Company Limited
Commercial operations have not yet commenced
Upper Lohore Khola Hydropower Company Limited
Continuous loss for 3 consecutive years
Continuous loss for 3 consecutive years
Minimum threshold of 250 trading days not complied.
Investment : All companies listed under the Investment sector meet the eligibility criteria for loans against shares.
Life Insurance: Among fourteen companies listed under Life Insurance sector, following one company does not meet the criteria for availing loan against share:
Manufacturing & Processing: Among nineteen companies listed under Manufacturing & Processing sector, following nine companies does not meet the criteria for availing loan against share:
Minimum threshold of 250 trading days not complied.
Continuous loss for 3 consecutive years
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Sarvottam Paints Industries Limited
Minimum threshold of 250 trading days not complied.
Shreenagar Agritech Industries Limited
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Minimum threshold of 250 trading days not complied.
Micro Finance: Among fifty companies listed under Micro Finance sector, following nine companies does not meet the criteria for availing loan against share:
Dhaulagiri Laghubitta Bittiya Sanstha Limited
Mahila Laghubitta Bittiya Sanstha Limited
Manushi Laghubitta Bittiya Sanstha Limited
Matri Bhumi Laghubitta Bittiya Sanstha Limited
NIC Asia Laghubitta Bittiya Sanstha Limited
Samudayik Laghubitta Bittiya Sanstha Limited
Shrijanshil Laghubitta Bittiya Sanstha Limited
Swastik Laghubitta Bittiya Sanstha Limited
Minimum threshold of 250 trading days not complied.
Unique Nepal Laghubitta Bittiya Sanstha Limited
Non-Life Insurance: Among thirteen companies listed under Non-Life Finance sector, following one company does not meet the criteria for availing loan against share:
AGM/Audit Pending since FY-2079/080
Others: Among nine companies listed under Others sector, following four companies does not meet the criteria for availing loan against share:
Minimum threshold of 250 trading days not complied.
AGM/Audit pending for FY-2080/081, FY-2081/082
Continuous loss for 3 consecutive years
Trading: Among two companies listed under Trading sector, following one company does not meet the criteria for availing loan against share:
AGM/Audit pending since FY-2076/077
Notwithstanding the general criteria of identifying ineligible companies, Nepal Rastra Bank (NRB) mandates that Banks and Financial Institutions (BFIs) maintain their own internal roster of approved listed shares. Beyond satisfying standard regulatory criteria, shares must undergo a fundamental analysis evaluating metrics such as the Price-to-Earnings (P/E) Ratio, Price-to-Book (P/B) Value, Dividend Yield, and Dividend Payout Ratio. Consequently, BFIs may still reject certain listed companies for margin lending facilities even if they pass the baseline ineligibility screening.
As per the recent first hand reform launched by Securities Exchange Board of Nepal (SEBON) through Margin Trading Facility Directives, 2082, stockbrokers are now authorized to directly provide margin lending services to investors. Consequently, investors seeking margin trading facilities no longer need to depend on banks and financial institutions for margin loans.
To determine which listed companies qualify for margin trading, the directives establish the following eligibility benchmarks:
According to the latest notice issued by NEPSE, a total of 123 companies across various sectors qualify for margin trading facilities under existing securities regulations:
All listed companies except explicitly listed in the notice dated Chaitra 17, 2082 shall not be eligible for availing margin trading facilities.
A comparison of the regulatory stances of Nepal Rastra Bank (NRB) and the Securities Board of Nepal (SEBON) reveals a notable divergence in approach when it comes to lending against shares.
NRB's provisions appear considerably more permissive on this front: banks and financial institutions (BFIs) are allowed to extend loans against shares of listed companies even before the mandatory three-year lock-in period following listing has expired, against shares of companies that have failed to hold their Annual General Meeting for three consecutive years, and against shares of companies that have posted net losses for three straight years.
Taken together, these allowances suggest that NRB's regulatory framework leaves considerably more room for risk than SEBON's stricter safeguards would otherwise permit raising questions about whether the two regulators' standards are adequately aligned to protect the broader financial system.
