KATHMANDU: Newly appointed Nepal Rastra Bank (NRB) Governor Dr. Biswo Poudel is preparing to unveil the monetary policy for the upcoming fiscal year 2025/26, and share market investors are closely watching, hopeful for reform.
Investors recently submitted their demands to the central bank, expressing cautious optimism under Poudel’s leadership, especially after years of discontent during former governor Maha Prasad Adhikari’s tenure.
Many policies under Adhikari were seen as restrictive for stock market participants, particularly small investors.
Poudel, unlike his predecessor, is viewed as more sympathetic to the capital market. Public disclosures show he personally holds over Rs 140 million worth of shares in various companies, including promoter shares in Sanima Bank and investments in hydropower and energy firms such as Sanima Mai Hydropower and Chitwan Energy.
This has helped him gain credibility among retail investors. Though the Nepal Stock Exchange (NEPSE) and the Securities Board of Nepal (SEBON) regulate the market, NRB’s monetary policy significantly influences investor sentiment.
This is because banks, financial institutions, and insurance companies—entities heavily impacted by monetary policy—comprise over 52% of the total market capitalization in NEPSE.
According to Radha Pokhrel, President of the Capital Market Investors Association, “Even though SEBON is the regulator, NRB’s policies have a bigger impact on the market due to the large stake held by financial institutions.”
During Adhikari’s tenure, monetary policies frequently sparked fear among investors. In FY 2021/22, a controversial policy capped share-backed loans at Rs 120 million per person across the financial system, citing risk mitigation and support for small investors. The move was widely criticized and caused panic in the market.
Before retiring, Adhikari removed this institutional cap via the 2024/25 policy, but retained the individual loan limit. He had also introduced harsh provisioning requirements—up to 150% for margin loans above Rs 5 million—which were later reduced to 125% and then brought down to 100% by Governor Poudel.
Adhikari’s policies also restricted dividend payouts for microfinance institutions to just 15% of net profits and limited institutional share trading to 1% of holdings annually. This 1% cap was increased to 20% later, but investors still seek complete removal.
What investors want now
Investor associations are urging NRB to remove restrictions they believe hamper market growth. Their key demands include scrapping the 15% dividend cap on microfinance companies, allowing banks and financial institutions to freely trade shares without annual caps, facilitating margin lending through brokers for small investors under international best practices and allowing Non-Resident Nepalis (NRNs) to participate in secondary market trading without conditions.
“The 15% dividend limit on microfinance firms should go,” said Ritu Jung GC, President of the General Investors Association of Nepal. “We’ve submitted practical suggestions to the central bank that could truly revive the market.”
Ghanshyam Pandey, President of the Nepal Shareholders Association, echoed the sentiment, stressing the need to eliminate the share trading cap for financial institutions.
Prakash Rajaure, President of the Nepal Share Market Investors Association, highlighted the need to bring in global capital.
“To deepen the market and attract foreign investment, NRNs and foreign institutional investors must be allowed seamless access to the secondary market, including the ability to repatriate profits,” he said.
The 2025/26 budget also includes provisions to allow NRNs into the stock market.
As the monetary policy announcement approaches, investors remain hopeful that Governor Poudel’s approach—shaped by his own experience in the market—will usher in reforms that foster confidence and sustainable growth.
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