Margin Lending (Loan Against Shares)

A Margin / Loan Against Shares (also called "Share Loan" or "Margin Lending") in Nepal lets an investor borrow money against ordinary shares, promoter shares, mutual fund units or bonds that are listed on the Nepal Stock Exchange (NEPSE) and held in the borrower's Demat account, which are pledged as collateral. It is used by individual investors, firms and institutions either to re-invest in the secondary market or to meet personal/working-capital needs without selling their portfolio. The bank lends a percentage (typically up to 65-70% of the lower of the 120/180-day average closing price or the latest market price), and the pledged shares are blocked/lien-marked in favour of the bank through CDSC. It is regulated by Nepal Rastra Bank (NRB) under its Unified Directives, which cap the loan size and loan-to-value, set a maximum 1-year tenure, and trigger a "margin call" requiring cash/share top-up or auto-sale if the collateral value falls below the maintenance margin.