NRB Allows Up to 80% Share-Backed Loans for Financially Strong Listed Companies

Kathmandu-Nepal Rastra Bank (NRB) has introduced a new provision allowing banks and financial institutions to provide share-backed loans of up to 80 percent of the value of pledged shares for financially strong companies listed on the Nepal Stock Exchange (NEPSE).

Until now, banks were allowed to lend only up to 70 percent of the value of pledged shares. Under the new arrangement, lenders may extend an additional 10 percent loan after evaluating the financial strength of a listed company. The provision has been implemented through a regulatory directive in line with the central bank’s Monetary Policy for the fiscal year 2026/27.

Under the existing framework, the value of shares pledged as collateral is determined based on the lower of the average closing price over the previous 180 trading days published by NEPSE or the prevailing market price. Banks can now increase the loan-to-value ratio to a maximum of 80 percent for companies that receive a strong financial assessment.

To offer such products, banks and financial institutions are required to prepare a product paper explaining the methodology used to assess a company’s financial strength and publish it on their official websites. The assessment will consider factors such as the company’s paid-up capital, the minimum period it has been listed on the stock exchange, profitability and dividend distribution history, credit rating, compliance with regulatory requirements, and whether it has held annual general meetings on time.

The central bank has also clarified that once a share-backed loan has been disbursed, banks will not be permitted to revalue the pledged shares to increase the approved loan limit or extend additional loans against the same collateral.

The new provision is expected to encourage risk-based lending while improving access to credit for investors holding shares of fundamentally strong companies listed on NEPSE.