KATHMANDU, March 22: Commercial banks of Nepal have been found aggressively issuing loans against shares as collateral amid the ongoing economic slowdown that has led to a sluggish demand for loans in production businesses.
As per the records of Nepal Rastra Bank (NRB), the issuance of margin loans by 20 commercial banks soared 42.90 percent as of mid-February of the current fiscal year (FY). Margin loans in the review period soared to Rs 133.07 billion from Rs 93.12 billion recorded in the corresponding period of last year.
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According to stakeholders, the banks have been reeling under pressure of piling up of excess loanable funds due to low demand for loans from the private sector. The central bank has been mopping up excess liquidity of billions of rupees from the domestic banking system almost every week.
Nabil Bank stood at the topmost position in issuing margin loans, with the bank increasing its lending on the heading by 35.06 percent in the review period. The bank’s loan portfolio in the segment increased to Rs 17.50 billion from Rs 12.95 billion.
Global Bank, which issued margin loans of Rs 13.39 billion during this period, was in second position followed by Kumari Bank and Prime Bank which issued margin loans of Rs 10.59 billion and Rs 9.79 billion, respectively.
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