Banks ‘ready’ to provide share purchase loans
KATHMANDU, AUG 11 -
Bankers have expressed readiness to provide share purchase loans to stock investors against the guarantee of stockbrokers.
As per the demand of stockbrokers and investors, the central bank recently opened the door for banks and financial institutions (BFIs) to provide such loans. NBA President Ashok Rana said share purchase loans could be an important product for them amid suppressed credit demand. “We are ready to provide such line of credit to stockbrokers depending on their capital and net worth,” he said after the meeting between Stock Brokers’ Association of Nepal (SBAN) and Nepal Bankers ’ Association (NBA), Development Bankers ’ Association of Nepal (DBAN) and Nepal Finance Companies Association (NFCA) here on Friday.
Rana added that share purchase lending allowed here, which is of short-term nature, could be transformed into long-term as per the international practice. Commerz and Trust Bank CEO Anal Bhattarai said his bank was ready to extend such loans and was in talks with some stockbrokers. “At at time the market index is at around 400 points, we are in a safer space to lend,” he said, adding that his bank could provide such loans in a significant proportion.
During Friday’s meeting, stockbrokers also forwarded a draft proposal, including procedures for such loans, to bankers. “The proposal seeks to develop a universal requirement regarding documentation and other procedure for share purchase loans,” said Anjan Raj Poudyal, president of SBAN.
According to the proposal, the client seeking the loan should first forward its request letter to the brokerage firm. Then, the brokerage firm forwards the letter to interested BFIs on behalf of the client. After studying the client, BFIs will then decide whether to extend the loan.
“If the BFIs agree to extend the loan, the brokerage firm will attach a purchase receipt along with a guarantee letter,” said Poudyal. “The banks then provide loans based on those documents,” said Poudyal. Representatives of BFI associations present at the meeting said they would forward the proposal to member BFIs for suggestions. “We have decided to send the proposal to all BFIs, seeking their suggestions as soon as possible,” said Rana.
Posted on: 2012-08-11 09:05