Kathmandu: Nepal’s banks and financial institutions (BFIs) disbursed Rs 162.87 billion in loans backed by shares during the first 11 months of the current fiscal year 2025/26, reflecting growing investor demand and lenders’ willingness to expand margin lending amid abundant liquidity.
According to the latest Nepal Rastra Bank (NRB) report, commercial banks, development banks and finance companies collectively extended the record volume of share-collateralized loans, commonly known as margin loans, during the review period. Banking experts attribute the growth largely to the sector’s excess liquidity, declining lending opportunities in other sectors, and more flexible lending policies adopted by financial institutions.
Commercial banks dominated the market, accounting for more than 85 percent of the total margin lending. They disbursed Rs 139.76 billion in loans against share collateral, highlighting their leading role in financing capital market investments.
Among commercial banks, Nabil Bank emerged as the largest provider of share-backed loans, with outstanding margin loans exceeding Rs 17.53 billion as of mid-June. Global IME Bank ranked second after extending Rs 14.53 billion under the same category.
Development banks also expanded their exposure to the stock market, collectively issuing Rs 19.57 billion in margin loans during the review period. Among them, Muktinath Development Bank recorded the highest lending, providing Rs 3.96 billion in share-backed financing.
Likewise, finance companies issued a combined Rs 3.53 billion in loans against share collateral. Manjushree Finance led the segment with investments totaling Rs 683.1 million.
The significant rise in margin lending comes at a time when Nepal’s banking system continues to grapple with excess liquidity and subdued demand for business and industrial credit. With lending to productive sectors remaining sluggish, many banks have increasingly diversified their loan portfolios by expanding financing for capital market investments.
Market analysts, however, caution that while margin lending supports liquidity in the stock market, excessive exposure to share-backed loans could increase financial risks if market volatility intensifies. They stress the importance of prudent risk management and adherence to regulatory limits to safeguard the stability of both the banking system and the capital market.
Despite these concerns, the steady growth in margin lending indicates renewed confidence among investors and suggests that banks are increasingly viewing the capital market as an important avenue for credit expansion during a period of surplus liquidity.
