The Ministry of Finance has released a major roadmap to rebuild Nepal’s stock market. Economic growth has stayed slow for many months. Recent floods near the Bhote Koshi River also caused heavy losses to national assets. Because of these challenges, investor trust dropped significantly.
To fix these problems, officials introduced a massive policy update. The Government unveils 21-point action plan to revive Nepal’s capital market to improve trading systems, lower investor risk, and pull in new capital.
Why Nepal Needed Market Reforms
Nepal’s secondary market has suffered from poor liquidity and outdated rules for years. Small investors usually carried most of the financial risks.
In addition, severe weather caused major physical damage across key hydropower sites. The Bhote Koshi River flood on August 26, 2026, hit the business sector hard.
As a result, share trading activity dropped to low levels. Ministry leaders realized that basic administrative updates were not enough. Therefore, they created the Capital Market Strengthening and Revival Action Plan, 2083. This plan targets structural gaps, tax rules, and large fund participation.
Modernizing Primary Market Issuances
Primary share issuances in Nepal have used rigid methods for a long time. Fixed-price initial public offerings often failed to show the true worth of a firm. Consequently, strong companies struggled to gather long-term capital through public offers.
Sector Eligibility Standards
The Securities Board of Nepal will issue clear eligibility rules right away. Regulators will create specific criteria for key industries. These sectors include hydropower, manufacturing, tourism, agriculture, and pharmaceuticals.
Market-Based Price Discovery
Regulators plan to launch a market-oriented public offer system by Poush 2083. This system will feature a transparent price discovery method. In addition, officials will reform share allotment rules to protect general applicants.
New Financial Products and Broker Services
Nepal’s financial market has lacked product variety for many years. Local investors could only pick standard equity shares, basic mutual funds, or bank deposits.
Mutual Funds and Fixed Income Growth
Under the new plan, regulators will turn mutual funds into professional and diversified managers. Furthermore, guidelines for modern investment tools will appear by Mangsir 2083.
- Corporate bonds will offer businesses an alternative to bank loans.
- Exchange-Traded Funds will allow cheap, index-based investing for the public.
- Money-market tools will help big institutions manage short-term cash flows.
Upgrading Brokerage Houses
The action plan requires stock brokers to upgrade their operations completely. Brokerage firms must turn into tech-driven, financially stable providers. Additionally, new rules will allow brokers to offer margin loans directly to clients by Poush 2083.
New Legal Rules for Advanced Trading
Modern capital markets rely on advanced trading options to keep cash flowing smoothly. Unfortunately, old rules prevented intraday trades and short positions in Nepal.
To clear these hurdles, the government is updating the Securities Act, 2063. The new draft laws will lay down clear rules for three main tools:
- Intraday Trading: Traders can buy and sell stock shares within a single session.
- Securities Lending: Owners can earn extra income by lending out idle stock holdings.
- Short Selling: Active traders can manage downside risks during market drops.
Restructuring NEPSE and Adding Benchmark Indices
The Nepal Stock Exchange requires modern governance to keep up with regional exchanges. Therefore, the ministry will carry out structural reforms at NEPSE based on the task force report submitted on Poush 25, 2082.
Furthermore, officials will change how they measure overall market movements. The classic NEPSE Index will remain active as an All-Equity Index. However, a brand-new benchmark index will launch by Mangsir 2083.
This new index will calculate company weights using clear metrics:
- Free Float: The share of public stocks compared to locked promoter shares.
- Market Liquidity: Daily cash turnover and regular trading frequency.
- Corporate Health: Total debt levels, profit consistency, and balance sheet strength.
- Compliance Record: Timely financial disclosures and strict adherence to regulations.
Opening Stock Trading to Non-Resident Nepalis
A major weakness of NEPSE has been its strict limit on foreign capital access. Fortunately, the Government unveils 21-point action plan to revive Nepal’s capital market with direct pathways for diaspora investment.
The government will present key legal amendments to the Cabinet by Ashwin 2083. These changes cover two core laws:
- Foreign Investment and Technology Transfer Act, 2075
- Foreign Exchange Regulation Act, 2019
These legislative fixes will let Non-Resident Nepalis trade directly in the secondary market. Consequently, this step will bring significant investment flows from overseas communities.
Developing Bonds and Sustainable Finance
Nepal relies heavily on commercial bank loans to build major industrial projects. However, heavy bank reliance creates concentrated credit risks for lenders. Therefore, the government wants to move project funding toward corporate bond markets.
Regulators will update bond issuance rules by Ashwin 2083. Furthermore, authorities will build flexible frameworks for specialized bond types:
- Green Bonds to support solar, wind, and clean power plants.
- Disaster Bonds to raise funds for rebuilding after climate shocks.
- Social Bonds to fund public health, clean water, and regional education.
- Project Bonds to back public works using direct project revenue.
At the same time, regulators will review fee structures to boost secondary trading for Treasury Bills and Development Bonds.
Fair Share Buybacks, Splits, and Tax Revisions
Outdated corporate provisions made share buybacks and stock splits very complicated. To fix this, regulators will release practical instructions for buybacks and splits by Magh 2083.
Capital Gains Tax Reforms
The ministry has proposed new capital gains tax rates to favor long-term investors.
- Long-Term Investors: Shares held for over 365 days will face a lower 3.75 percent tax rate.
- Short-Term Traders: Shares held for 365 days or less will face a 5 percent tax rate.
- Loss Offset Rules: Investors can subtract trading losses from gains within the same fiscal year.
- Final Tax Calculation: Net annual profit calculations will form the final basis for capital gains taxation.
Institutional Investments and Risk Controls
Big institutional funds in Nepal currently store huge cash reserves inside basic bank term deposits. This setup keeps valuable cash away from equity markets.
Mandatory Portfolio Adjustments
By Mangsir 2083, officials will create legal paths for major institutions to rebalance their funds. Targeted organizations include:
- Employees Provident Fund
- Citizen Investment Trust
- Social Security Fund
- Insurance Companies and Mutual Funds
These major funds will gain policy support to move capital out of cash deposits and into listed securities.
Banking Sector Risk Reviews
By Kartik 2083, securities regulators and Nepal Rastra Bank will complete a joint risk review. This study will examine direct bank stock holdings, system liquidity, and market risks.
Additionally, the central bank will enforce a mandatory 45-day minimum holding period for bank equity investments. This rule will curb speculative share trading by commercial banks and safeguard depositor money.
Central Depository Upgrades and Venture Capital
A modern market needs dependable clearing systems and active startup funding.
Upgrading Depository Systems
The government will boost the capacity of CDS and Clearing Limited. Structural studies regarding clearing setups for new financial products will wrap up by Falgun 2083.
Venture Capital Frameworks
Regulators will establish a risk-based legal framework for Private Equity and Venture Capital funds by Poush 2083. The new rules will clear up capital repatriation, profit payouts, and exit paths for investments in local tech startups and growing small businesses.
Action Plan Target Dates
The Ministry of Finance has attached clear target dates to every reform point.
- Ashwin 2083: Foreign investment law fixes for diaspora traders, updated bond market rules, Treasury Bill trading upgrades, and new capital gains tax rules.
- Kartik 2083: Joint central bank and securities board review on bank exposure limits.
- Mangsir 2083: Launch of the new benchmark index, updated mutual fund rules, and institutional portfolio rebalancing rules.
- Poush 2083: IPO price discovery guidelines, broker margin lending rollout, and venture capital regulations.
- Magh 2083: Practical procedures for share buybacks and stock splits.
- Falgun 2083: Depository system expansion and structural clearing studies.
Long-Term Market Impact
The Government unveils 21-point action plan to revive Nepal’s capital market during a crucial economic period. For retail investors, margin trading, loss-offsetting tax rules, and price discovery offer a fairer trading environment.
For large institutions and overseas Nepalis, the strategy provides clear legal routes to fund national growth. If authorities meet these target dates, the stock market will grow into a steady, mature financial hub.
Frequently Asked Questions
What is the main purpose of the 21-point action plan?
The action plan aims to modernize stock trading, build investor trust, reduce systemic risks, and open the stock market to institutional and foreign investors.
How will the new Capital Gains Tax rules work?
Investors who hold stocks for over 365 days will pay a 3.75 percent tax on profits. Holdings sold within 365 days will face a 5 percent tax rate. Traders can also deduct losses from gains made in the same year.
When can Non-Resident Nepalis trade on the stock market?
The government plans to submit necessary foreign investment law updates by Ashwin 2083. Trading access for non-resident citizens will open after Cabinet approval and technical setups.
Will stockbrokers offer margin lending to traders?
Yes. Licensed stockbrokers will provide margin lending facilities directly to retail clients. Regulators plan to roll out this service by Poush 2083.
Conclusion
The Ministry of Finance has taken a firm step toward lasting market reform. As the Government unveils 21-point action plan to revive Nepal’s capital market, investors can look forward to deeper liquidity, lower volatility, and wider market access. By modernizing public offers, welcoming diaspora capital, adjusting tax steps, and introducing margin trading, Nepal is building a solid base for sustainable economic growth. Proper implementation will now decide how quickly these plans reshape the national financial landscape.
