NRB relaxes rule for margin call ; Percentage of margin lending remains unchanged

In the monetary policy announced today, the governor has relaxed the rule for margin call. This rule has given all the borrowers a deep breath, at the time of bearish market. Now the banks call give a margin call only if the stock price of the company falls below 20% of the 180 days average. Previously, the banks used to call even if the price slipped by 10%.

However, in contrast to everyone's expectation, percentage of margin lending has remanied unchanged. Companies can lend for 50% of 180 days average price. 

Similarly, Margin Lending has been now capped to 25% of BFIs' core capital which was 40% last year. Thus, banks capacity for margin lending has been decreased, whereas lending in priority sector is motivated.