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Loan Against Share

This loan product facilitates working capital financing to Individual, Firm or Company involved in trading of shares or making portfolio investments.

This loan product facilitates working capital financing to Individual, Firm or Company involved in trading of shares or making portfolio investments. The loan amount is equivalent to 70% of the 180-day average market price of the share, or the latest traded price, whichever is lower. Shares that are traded publicly will serve as collateral.

Features

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Competitive premium rate.
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Fast approval process.
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Facility available in all branches.
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Tenure : Loan/Overdraft against pledge of shares shall not be over 365 days.

Eligibility

  • Individual, Firm or Company involved in trading of shares or making portfolio investments or firm/company which is allowed by its charter documents (MOA/AOA) to trade in shares and/or make investments.
  • Individual, Firm or Company should not have credit facilities in excess of 90% of total shares held by him/her/them at the time of approving credit facility.
  • Promoter shareholder/s of Commercial Banks having more than 1% of promoter share can pledge only 50% of the shares held by him/her/them.
  • Loan/Overdraft against pledge of promoter share of an institution may be granted only if such institution has completed 5 (five) years of successful operation from the date of commercial operation.

Purpose

This loan is based on cash flow of the firm/company qualifying to borrow against the pledge of ordinary (public) and promoters' shares/stocks/securities. In case of loan to individuals for consumption purpose or any other purpose, sources of interest repayment shall also be assessed before taking exposure. The
purposes of product are:
a. To finance for personal consumption/contingency.
b. To finance for trading (buy and sell) of shares/stocks/debentures/ other securities.
c. To finance for investment in other business entities and others.

Acceptable Shares

  • Only ordinary shares (public or promoters) of reputed listed public limited companies Commercial Banks and Insurance Companies that are actively traded (at least 15 registered trades in the stock exchange floor during past 3 months) in Nepal Stock Exchange (NEPSE) are accepted.
  • Shares of merging institutions are not accepted till the time they are reopened for trading.
  • Shares of any institutions that have been suspended or delisted by NEPSE for any other reason than merger shall not be accepted.
  • Shares of a company may be accepted only if they have positive core capital/net worth.
  • Shares of a company may be accepted only if they have met capital adequacy requirements or any other capital requirement set by its regulatory authority.
  • Shares of a company may be accepted only if they have completed statutory audit within one year from the close of a financial year.

Required Information

  • Forecasted income statement.
  • Total portfolio of shares and Loan/Overdrafts availed from other financial institution/s.
  • Net worth of the applicant/guarantor.
  • Bank statement.

 

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