ILLUSTRATION: MINH UONG
START WITH a number that makes anyone stop and think: Nepal now has over 7.6m stock-market accounts with nearly 5m people actively using the MeroShare app. In a country of 30m, that sounds like a beautiful story of financial democracy. With fixed-deposit rates crashing and the real estate market cooling, everyday Nepalis have flooded into the Nepal Stock Exchange (NEPSE). Yet look beneath the surface of this massive retail wave and you find a very different game being played.
Recently the securities regulator, SEBON, introduced new rules for margin trading, allowing investors to buy shares through a broker on credit. Instead of paying full price upfront, you put down 30% of your own cash and borrow the remaining 70%. In theory this lowers barriers to entry. In truth the system is built with hidden tripwires that heavily favour big players who have piles of money already.
The game is rigged mathematically. The regulator rules state that a brokerage firm must possess a massive Rs200m in capital just to offer this borrowing service. On top of that, a broker can only lend money up to five times its own net worth, and no single client—including immediate family—can consume more than 10% of that broker’s total lending portfolio.
These safety caps sound smart but here is the catch: lending ability is tied entirely to the size of the broker. Massive, corporate-backed brokerages easily team up with commercial banks to pull in huge sums of money, which they offer as leverage to their wealthiest clients.
Meanwhile the smaller, neighbourhood brokers that regular retail investors actually use are legally locked out of the lending business altogether. As of June only 31 brokerage firms have received approval to offer these services, keeping the game confined to the big players.
At the same time, the old banking loophole is still wide open. Alongside this broker system, big commercial banks hand out traditional loans against shares. For these bank loans, the picture has become a regulatory rollercoaster. After removing the Rs200m ceiling for institutional investors in July 2024, the central bank expanded the playground by raising the individual borrowing limit to a whopping Rs250m in its July 2025 monetary policy. A Rs250m limit is a massive runway for a tiny elite who already own giant portfolios—especially when competing against institutional borrowers who face no limits at all.
The rules around “promoter shares”—the heavy-hitting stakes owned by company founders and bank directors—show exactly how deep this goes. When these big players use founder shares for bank loans, the central bank caps the loan at just half the shares’ value. Why? Because Nepal’s banking system has long been trapped in a cozy, dangerous loop: the country’s wealthiest people sit on the boards of the very banks they borrow money from. It is the ultimate conflict of interest.
To put this in perspective, total bank loans against shares have surged past Rs159 billion. Central-bank data shows that a tiny fraction of a percent—just 0.1% of all bank borrowers in Nepal—had sucked up nearly 4% of all loan money in the country.
That concentration has only intensified: large-ticket trades exploded by nearly 25% recently, adding almost Rs20bn in fresh credit. The new broker lending system is simply a shiny new floor built on top of this unequal foundation.
So where do the millions of everyday retail investors fit into this picture? Put brutally, they are there to provide liquidity.
When a wealthy, leveraged investor wants to make a massive trade, someone has to be on the other side of that deal to buy what they are dumping. A massive, highly emotional crowd of everyday investors gives the elites a perfect safety cushion to jump in and out of large positions quickly without crashing the market. With the new margin rules mandating daily reporting and enforced sell-offs when maintenance margins drop below 20%, the trap is fully automated. When the market dips and brokers force a panic-sale of a wealthy client’s shares, it is the regular retail buyer on the other side who watches their small savings evaporate in the market volatility.
Upgrading an exchange that millions of ordinary Nepalis use is long overdue. But the final architecture shows a classic, frustratingly familiar Nepali pattern: a new financial innovation is marketed as a way to give “access to all”, but it is engineered to work best for the people who had the most access to begin with already. ■
