Large stock investors have increased their utilization of share mortgage loans, marking an increase by 11.6 percent in seven months. According to the data of Nepal Rastra Bank (NRB), till mid-February, loans of margin trading (share securities) have surged to Rs 85.172 billion whereas, till mid-July, 2023, the disbursement stood at Rs 76.30 billion. The data shows that an additional Rs 8.86 billion have flown in share mortgage loans from banks and financial institutions in a period of seven months.
Data shows that large investors are availing share mortgage loans, especially those exceeding Rs 10 million. Average share mortgage loans increased by 11.6 percent in 7 months, while share mortgage loans above Rs 10 million increased by 16.9 percent. According to the data, it seems that there is a surge in share mortgage loans among larger investors.
By mid-February, a total amount of Rs 52.260 billion had been allocated for share mortgage loans exceeding Rs 10 million, whereas by mid-July 2023, disbursements for loans above Rs 10 million totaled Rs 44.72 billion.
Additionally, Rs 11.92 billion was disbursed for share mortgage loans ranging between Rs 5 million to Rs 10 million, reflecting a growth of only 1.2 percent over seven months. Similarly, share mortgage loans ranging from Rs 25 to Rs 50 million increased by 8.3 percent over the same period, reaching Rs 13.84 billion. In contrast, loans below Rs 2.5 million experienced a mere 1.5 percent increase, amounting to a total disbursement of Rs 7.14 billion till mid-February.
Despite the high-risk weightage, which maintains 100 percent for share mortgage loans under Rs 5 million and 125 percent for loans above that, the growth for large share mortgage lending remains high. There is a provision where an individual can borrow a maximum of Rs 150 million and an organization Rs 200 million for share transactions from banks and financial institutions. However, there have been demands from investors to lift these borrowing limits.
