Nepal | September 29, 2020

Nepse to separate microfinance and development banks sub-indices

Himalayan News Service
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Kathmandu, October 24

Nepal Stock Exchange (Nepse) — the sole secondary market of the country — has planned to separate microfinance institutions from the sub-index of development banks. Nepse will introduce a new sub-index and separate development banks and microfinance institutions.

Chandra Singh Saud, the newly-appointed general manager of Nepse, had authorised separating development banks and microfinance institutions on October 15. The government had appointed Saud as general manager of Nepse on October 9.

According to Murahari Parajuli, spokesperson for Nepse, the local bourse is doing internal trial to introduce a new sub-index within next week.

“Our technical team is testing the system to introduce a new sub-index. Nepse will make it live after fixing technical problems,” he said. “We have seen that the share prices of microfinance institutions are highly volatile. It is difficult to discern the real value of development banks and microfinance institutions when they are grouped together, which is why Nepse is planning to separate them.”

From the first day of separation, the sub-index of microfinance institutions will be calculated as per their price. Nepse calculates the sub-index according to the traded share price of the individual company of the subgroup that is subtracted from the previous day’s traded share price and divided by 100.

In the secondary market, shares of microfinance institutions have higher value against the share price of development banks. Microfinance institutions are registered as class ‘D’ and development banks are registered as class ‘B’ financial institutions at Nepal Rastra Bank.

Currently, 71 companies are listed under the sub-index of development banks and out of them 38 are development banks and 33 are microfinance institutions. A total of 196 companies are listed under 13 groups at Nepse. After separation of microfinance companies, there will be 14 subgroups in the secondary market.

The sub-index of development banks declined by 11.64 points or 0.61 per cent to land at 1,894.97 points today.

 


A version of this article appears in print on October 25, 2017 of The Himalayan Times.


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