Government Unveils 12-Point Capital Market Reform Plan under Economic Reform Implementation Agenda 2082

The Government of Nepal has released the "Economic Reform Implementation Plan 2082," incorporating nearly a dozen capital market reform programs based on the recommendations of the High-Level Economic Reform Commission 2081, led by Rameshore Khanal.

Key highlights of the capital market reform agenda include:

• Restructuring of the Securities Board (SEBON):
  The Board will include representatives from the Revenue Secretary and Deputy Governor of Nepal Rastra Bank. Private sector and other external representatives will be removed, while expert members will be added. This reform is set to be completed within one year.

• Restructuring of Nepal Stock Exchange (NEPSE) and CDS & Clearing Ltd. (CDSC):
  To enhance private sector participation, NEPSE will be restructured within a year. CDSC will also be restructured to allow safe depository services in collaboration with other institutions.

• Introduction of Margin Lending via Brokers:
  Investors will be able to access margin loans through licensed brokers. This reform is scheduled to be implemented within one year.

• IPO Restrictions on Hydropower Companies:
  Hydropower companies will be allowed to issue IPOs only after commencing electricity production. This policy is to be implemented within two years.

• Transparent Premium and Book Building Mechanism:
  A clear and transparent method for issuing shares through premium pricing and book-building will be introduced within six months. SEBON will be the responsible agency.

• Government Bond Management Reform:
  Instead of direct government investment, ministries will be authorized to issue bonds to mobilize financial instruments. This policy will be implemented within one year.

• Lowering Issuance Costs and Simplifying Capital Mobilization:
  Share and bond issuance costs will be reduced and the process simplified to help private manufacturing companies raise capital from the market. This reform will be completed within six months.

• Capital Market Awareness and Promotion:
  Awareness campaigns will be conducted to promote the use of financial instruments via the capital market. SEBON will lead the initiative, with the Ministry of Finance providing supervision and facilitation.

• Secondary Market for Government Bonds:
  A functional secondary market for government bonds will be established within one year. The Ministry of Finance and SEBON will oversee the implementation, while the Office of the Prime Minister and Nepal Rastra Bank will monitor and facilitate the process.

The plan spans implementation periods ranging from 6 months to 2 years. These reforms aim to build a transparent, efficient, and investor-friendly capital market environment in Nepal.