Banks and financial institutions (BFIs) have started approaching stock investors for margin lending - loan against share certificates as collateral, thanks to excessive liquidity in banking system and bullish trend in the stock market.
Shreeman Sapkota, an investor, told Republica that he has been getting offers from a bank for margin lending at a very low rate. “The bank is offering me interest of as low as 8 percent. I am expecting the rate to go down further,” Sapkota said without disclosing the name of the bank. “Interest rate will come further down if margin lending is not tightened by the Nepal Rastra Bank (NRB)-- central bank.”
Nepal Stock Exchange (Nepse) index gained a massive 135.84 points over the past month. The benchmark index closed at 779.79 on Sunday.
Acting President of Nepal Investors´ Forum, Raj Kumar Timilsina, said it is now easy to get bank loans against share certificates as collateral. “Earlier we had to approach bank for such loans. We used to face lots of difficulties while getting margin loans,” Timilsina said. “Now banks loans have become easy.”
Investors say margin lending has benefited them as such loans not only increase their purchasing capacity but also push the market up.
Anjan Raj Poudel, proprietor of Thrive Brokerage, told Republica that one of the reasons behind hefty surge in Nepse index was the easy availability of loans against share certificates.
However, investors have taken exception to the NRB´s decision to seek details on margin lending from BFIs. “The NRB reaction came too early. As the banks are sitting on a huge pile of cash, margin lending has proven beneficial for both investors and banks,” an investor told Republica preferring anonymity.
Last week, the NRB asked BFIs to furnish details of their status on margin lending.A CEO of a development bank told Republica that they were offering margin lending at attractive rates as they don´t have any attractive lending options. “It is true that BFIs are encouraging their clients for margin lending,” the CEO said. “The secondary market has become a secured sector for lending at a time when demand for bank loans is drying up despite excess liquidity in the banking system.”
source: republica,29 Dec 2013
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Shreeman Sapkota, an investor, told Republica that he has been getting offers from a bank for margin lending at a very low rate. “The bank is offering me interest of as low as 8 percent. I am expecting the rate to go down further,” Sapkota said without disclosing the name of the bank. “Interest rate will come further down if margin lending is not tightened by the Nepal Rastra Bank (NRB)-- central bank.”
Nepal Stock Exchange (Nepse) index gained a massive 135.84 points over the past month. The benchmark index closed at 779.79 on Sunday.
Acting President of Nepal Investors´ Forum, Raj Kumar Timilsina, said it is now easy to get bank loans against share certificates as collateral. “Earlier we had to approach bank for such loans. We used to face lots of difficulties while getting margin loans,” Timilsina said. “Now banks loans have become easy.”
Investors say margin lending has benefited them as such loans not only increase their purchasing capacity but also push the market up.
Anjan Raj Poudel, proprietor of Thrive Brokerage, told Republica that one of the reasons behind hefty surge in Nepse index was the easy availability of loans against share certificates.
However, investors have taken exception to the NRB´s decision to seek details on margin lending from BFIs. “The NRB reaction came too early. As the banks are sitting on a huge pile of cash, margin lending has proven beneficial for both investors and banks,” an investor told Republica preferring anonymity.
Last week, the NRB asked BFIs to furnish details of their status on margin lending.A CEO of a development bank told Republica that they were offering margin lending at attractive rates as they don´t have any attractive lending options. “It is true that BFIs are encouraging their clients for margin lending,” the CEO said. “The secondary market has become a secured sector for lending at a time when demand for bank loans is drying up despite excess liquidity in the banking system.”
source: republica,29 Dec 2013
LINK
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