Monday, January 21, 2008

NRB brings new rule

Rastra Bank (NRB) has today brought a new directive replacing the earlier one that is has published on December 27 temporarily stopping the margin lending.
According to the new directive, promoters can now sale 49 per cent of their shares and retain 51 per cent. Short supply and high demand has been blamed for the abnormal rise of share prices.
"The capital market was heated due to the short supply. Now with the new rule, shares volume at the secondary market will increase stabilising the capital market," an official at the central bank, the regulator of the financial institutions said adding that the margin lending has been yet another reason.
However, the central bank has also stated that the financial institutions can lend against the shares. "Unlike the practice of lending against the cheat of a broker, now the share certificate is mandatory."
A financial institution can lend 50 per cent of the total amount against the original share certificate in average of 180 days price. "But the financial institutions can not lend more than their core capital," said the official, adding that the financial institutions that have lent will get time till Asad to bring its lending within the ceiling, until then they are not allowed to lend any more.

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