Leveraging Assets: The Rules, Criteria, and Exclusions for Pledging Listed Shares and Trading on Margin
Summary
Nepal Rastra Bank has set strict eligibility rules for using listed shares as collateral, excluding companies with weak capital, negative net worth, audit delays, repeated losses, or low trading activity. SEBON has separately authorized brokers to offer margin lending and NEPSE has published a list of 123 companies eligible for margin trading.
Key Points
- Nepal Rastra Bank has defined which listed company shares can and cannot be pledged for bank loans, using criteria such as capital adequacy, net worth, audit completion, losses, and trading activity.
- Dozens of companies across hydropower, microfinance, insurance, manufacturing and other sectors are ineligible for share-backed lending for reasons including continuous losses, pending audits, and insufficient trading days.
- SEBON's new Margin Trading Facility Directives allow stockbrokers to provide margin lending directly to investors, replacing the earlier bank-dependent model.
- NEPSE has published 123 companies eligible for margin trading, subject to conditions such as minimum shares listed, profitability, net worth, and post-IPO listing period.
