Commercial banks in Nepal have increasingly turned to issuing loans against shares as collateral during the ongoing economic slowdown, which has reduced demand for credit in productive sectors.
Data from Nepal Rastra Bank (NRB) shows that margin lending by 20 commercial banks rose sharply by 42.9 percent as of mid-February in the current fiscal year. The total volume of such loans climbed to Rs 133.07 billion, up from Rs 93.12 billion in the same period last year.
Industry stakeholders say banks are facing mounting pressure from excess loanable funds due to weak borrowing demand from the private sector. To manage this surplus liquidity, the central bank has been regularly absorbing billions of rupees from the banking system.
Among the banks, Nabil Bank led in margin lending, increasing its portfolio by 35.06 percent to Rs 17.50 billion from Rs 12.95 billion. It was followed by Global Bank with Rs 13.39 billion in such loans, while Kumari Bank and Prime Bank issued Rs 10.59 billion and Rs 9.79 billion, respectively.
