Banks Prohibited To Invest In Microfinance Stocks

May 26, 2021 | Investopaper

Banks and financial institutions are no longer allowed to buy shares of microfinance companies. NRB has prohibited BFIs to invest in the shares of microfinance companies. Such instruction has been given by issuing a circular to implement the new provision made in the third quarter monetary review.

If the BFIs have purchased the shares of microfinance companies until Jestha 10, 2078 BS, they have to sell or divest those shares by Poush end, 2078 BS. Banks will no longer be able to make short-term investments in shares of the companies.

“Out of the investments with more than one year period, only up to 1 percent of the primary capital can be sold in a financial year. However, this provision will not be considered as an obstacle to sell the shares invested until Jestha 10, 2078 BS by Ashad end 2079 BS” the circular states.

While disbursing share pledge loan, banks can float only 70 percent of the average price of the last 180 working days published by Nepal Stock Exchange Limited or the prevailing market price of the share whichever is less. Earlier, it was allowed to take share pledge loan only on the basis of valuation of 120 working days.



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