Kathmandu, February 1
Due to mounting pressure from various investor groups, the Nepal Stock Exchange (Nepse) — country’s sole secondary bourse — has been compelled to back away from its plan to make Personal Account Number (PAN) mandatory for share investors.
Nepse today said that it was forced to revoke the decision due to immense pressure from various investor lobby groups. PAN is a code that helps the government identify individuals and companies and in tracking the source of money, which eventually will promote transparency in the secondary market as well.
Earlier, the Securities Board of Nepal (SEBON) — secondary and commodities market regulator — had asked Nepse to submit a progress report on the implementation of PAN provision for share investors. However, Nepse has informed SEBON that in the present context it will be unable to compulsorily apply the PAN provision for investors.
According to Chandra Singh Saud, chief executive officer of Nepse, they have already written to SEBON mentioning its inability to implement the PAN provision at present. “We need to first conduct a thorough study before we can implement the provision.”
“We have signed an understanding with the investor lobby groups that we will implement the PAN provision compulsorily only after we have conducted a study regarding it and there is a conducive environment for its implementation,” Saud informed.
However, Finance Minister Yubaraj Khatiwada, while presenting the government’s policies and programmes for the current fiscal year had clearly stated that the PAN provision would be made mandatory for stock trading from this fiscal year itself.
Seeking anonymity, an officer from SEBON, said that by not implementing the PAN provision Nepse is apparently going against the government’s plan to make it mandatory. “We are closely watching the recent developments at Nepse and will take necessary action once we have held discussions with concerned authorities.”
SEBON has informed that it is holding discussions with the Inland Revenue Department to overcome the challenges and develop a procedural framework to implement the PAN provision.
Once the PAN system is implemented, share investors will require a PAN identification to buy or sell shares in the secondary market. This provision is expected to increase transparency while investors are filing their taxes.
Meanwhile, Rajan Lamsal, general secretary of Nepal Investors Forum, said that the effect of the liquidity shortage in banks and financial institutions can be clearly seen in the capital market. “At a time when investors are not so keen to even use online trading system, implementation of PAN system might have a major impact on investor sentiment.”
A version of this article appears in print on February 02, 2019 of The Himalayan Times.