Govt forms committee to study capital market challenges

 Kathmandu, June 8: 

The government has formed a committee to study the current situation of the capital market in the country.

Finance Minister Janardan Sharma Prabhakar informed on Wednesday at the 30th Anniversary programme of the Securities Board of Nepal (SEBON) that a four-member suggestion committee is formed with the participation of the Ministry of Finance, Nepal Rastra Bank and SEBON to solve various problems witnessed in the capital market and submit suggestions. 

After the discussion held at the ministry on Wednesday morning, a committee has been formed under the leadership of the Executive Director of the SEBON, and comprises of one representative each from the MoF, and NRB and one representative of SEBON as the member secretary. 

The committee has a mandate to hold dialogue and discussions with all the stakeholders of the capital market. It will help in resolving the issues of the capital market and formulating the monetary policy for the upcoming fiscal year 2022/23. 

Addressing the programme, FM Sharma recalled that in the budget of the coming fiscal year 2022/23, he had given priority to the programmes that will make the capital market stronger. 

Articles 329, 330, 331 and 332 of the forthcoming budget speech carry the issues of the capital market's reform, regulation and supervision.

The budget has provisions to make the secondary market more competitive, expand and diversify it in order to minimise risks and protect investors' interest. 

FM Sharma, in the budget, has said to develop a bond market by managing the secondary market of the government and institutional bonds, operationalize the commodity market, and license private equity and venture capital companies. 

Likewise, it has announced to create legal provisions to invite investment from non-resident Nepali people, and reserve 10 per cent shares of each Initial Public Offering (IPO) for Nepali migrant workers in foreign land. 

Similarly, a pledge has also been made to force the companies with  a capital of Rs. 1 billion or more or make transactions of more than Rs. 5 billion, use natural resources, receive subsidy, concession or tax discount from the state to issue the IPO. 

He said that the government was committed to protect the interests of investors by continuously improving the capital market. He also directed the regulatory bodies to increase the knowledge of the investors by disseminating information regularly about the capital market. 

"We need to have knowledge about capital markets and financial literacy. We have to mobilize manpower for training. Now it is not enough. There is a lack of outreach to new and small investors," he said. 

He stressed on the need to solve the problems of small, medium and large investors by coordinating with the regulatory bodies of the 

capital market, making the share trading effective by using new technology and operating the market without allowing the investors to complain.

Speaking on the occasion, Chairman of the SEBON, Ramesh Hamal, stressed on the need for an effective coordination of the capital market regulator with all the regulatory agencies of the financial sector. He sought the support of the MoF in resolving the issues in the market and implement reforms. 

He informed that the board has initiated a Merit-Based Approval System for the securities registration and licenses. "Within four months, SME Platform will come into operation at the Nepal Stock Exchange Limited, and the provision to reserve 10 per cent of the IPO for the migrant workers will be implemented," said Hamal. 

According to him, the share market witnessed a continuous downfall due to the international conflict, increase in the price of crude oil, liquidity crisis in the country and hike in interest rate, and inflation. 

"SEBON is aware of the problems the investors are facing and we are committed to resolve them," he said while maintaining that there is a need for the review of limit on margin lending and boost the confidence of investors. 

According to Hamal, the SEBON soon will develop securities instrument for investment diversification in the capital market. He said that Automated Electronic Auction System would be prepared in the line of the international practice to attract real sector companies to the stock market. 

Published in The Rising Nepal daily on 9 June 2022.