Banks Remove Nepal Reinsurance Company Shares from Margin Loan Eligible List

Kathmandu – Banks have begun delisting the shares of Nepal Reinsurance Company Limited (Nepal Re) from their margin loan eligible lists, citing rising risk exposure after it was revealed that riot insurance coverage exists only under Nepal Re.

Each year, the Nepal Stock Exchange (Nepse) publishes a list of companies eligible for margin trading based on specific regulatory criteria. Until recently, shares of 102 companies, including Nepal Re, qualified for margin-based lending. However, following the recent Gen-Z protest and subsequent concerns regarding Nepal Re’s exclusive handling of riot insurance, banks have started reassessing the company’s risk profile.

Kumari Bank Limited has officially decided to remove Nepal Re’s shares from its margin loan list and announced that it will no longer issue new margin loans against those shares. Sources say other banks are likely to follow suit after conducting their own risk evaluations.

Nepse determines eligibility for margin trading in accordance with Section 8, Chapter 3 of the Margin Trading Facility Procedure, 2075 BS, primarily for broker-provided loans. Banks, however, maintain their own internal lists for margin lending, which they revise periodically based on market trends and company performance.

Under existing guidelines, margin loan facilities are available only for companies that have distributed a dividend of more than 10 percent in the last two fiscal years, have at least 10,000 shareholders, and possess net assets not less than their paid-up capital. Additionally, eligible companies must have conducted their annual general meeting within six months of the fiscal year’s end.