Kathmandu, August 28

Nepal Bankers’ Association (NBA) has urged the concerned authorities not to delay issuing broker licence to commercial banks.

On August 16, the Finance Committee under the Federal Parliament had directed the government not to provide sharebroker licence to commercial banks until a sub-panel conducts the necessary study.

In this regard, the NBA meeting today has urged the government to issue brokerage licence to banks as soon as possible.

During the meeting it was decided to formally demand with the government to provide such licence to those banks that have complied with all procedures at the Nepal Stock Exchange (Nepse).

Earlier, the government had directed the Securities Board of Nepal (SEBON) to start the process to provide sharebroker licence to commercial banks. After receiving the direction from SEBON, Nepse and CDS and Clearing Ltd (CDSC) had started the homework for the purpose.

On July 15, SEBON had directed Nepse to provide sharebroker licence to the banks’ subsidiary companies as per the recommendation made by a team of experts formed by the Ministry of Finance last year. Subsequently, seven commercial banks — Sanima Bank, NIC Asia Bank, Prabhu Bank, Machhapuchchhre Bank, Mega Bank, Citizens Bank International and Global IME Bank — opened their subsidiary companies to establish broker firms.

In December last year, a team of experts led by Nepal Rastra Bank’s Deputy Governor Shiva Raj Shrestha had suggested that banks should be allowed to establish subsidiary brokerage firms.

As per the direction of SEBON, before issuing the sharebroker licence, Nepse needs to determine the number of subsidiary companies of commercial banks, minimum capital of such firms, necessary human resources, physical infrastructure, and their number of branches across the country, among others.

Similarly, the NBA has also requested the Nepal Rastra Bank to revisit its earlier decision to revise the formula to calculate the spread rate that banks are required to maintain, citing that the new spread calculation method has been troubling the banking and the entire financial sector.