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Margin Lending of CBs Reaches Rs 28 Billion

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Margin Lending of CBs Reaches Rs 28 Billion
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August 17: Investment of commercial banks in margin lending has risen by 50.70 percent in the last FY 2072/73 compared to the previous FY. The total margin lending investment of the commercial banks in the last FY stood at Rs 28.55 billion which was Rs 18.94 billion during the previous FY. The data is based on the fourth quarter financial reports published by the banks.

Although the margin lending investment of the banks has increased, it covers only two percent of the total loans extended. With the recent bullish stock market, the banks have also increased the share of margin lending loans in its total lending. However, investment and loan extensions of the banks in other sectors have also significantly increased in the review period, which showcased a narrow growth in margin lending investment.

Similarly, the margin lending investment of the commercial banks has risen by Rs 7 billion compared to the investment till last mid-April. The investment till last mid-April was Rs 21.62 billion which increases to Rs 28.5 billion within three months in the mid-July.

In the recent days, banks and financial institutions are aggressively expanding margin lending investment. Due to the excess liquidity in the market, interest rates are at the least point. Additionally, contraction of investment sectors has also played a vital role in piling up liquidity in BFIs. The factors have attributed in diverging bank investment from other sectors to the share market. The banks in the mean time increase the margin lending investment to cash out the record breaking share market.

By the end of the last FY, 25 out of 29 commercial banks had extended margin lending loans. Standard Chartered, Nepal SBI, and Agricultural Development Bank had not extended margin lending loans. Meanwhile, Nabil Bank that started margin lending loans from last mid-April has already extended Rs 893.9 million loans in the sector.

As per the annual financial reports of the last FY published by the BFIs, Nepal Investment Bank is at the front run for increasing investing on margin lending.  The bank has increased the margin lending investment by 12 times to Rs 603.6 million. However, NIC Asia Bank has taken the top spot based on the total amount. It has invested Rs 4.14 billion on margin lending.                                                                                                                       

 

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