KATHMANDU, April 21: Just when the government thought it was close to greenlighting a new stock exchange, a surprising twist has thrown its plans into disarray.
A report by the High-Level Economic Reform Suggestion Commission led by former Finance Secretary Rameshore Khanal has cast serious doubts over the need for a second stock exchange — leaving the KP Oli-led government scrambling for a way forward.
It all seemed straightforward at first. Riding on a report commissioned during the previous administration, the current government had fast-tracked the process to issue a new stock exchange license. A three-member study committee led by former Nepal Rastra Bank Deputy Governor Chintamani Shiwakoti had laid the groundwork back in January 2024. Building on that, the Securities Board of Nepal (SEBON) had already set rules, procedures and was preparing to invite applications.
But then came the unexpected pushback from within.
Formed in September last year, Khanal-led commission — tasked with recommending economic reforms — stated that Nepal doesn’t need another stock exchange. The commission instead suggested restructuring the existing Nepal Stock Exchange (NEPSE) by selling its shares to the private sector.
“Nepal Stock Exchange should be restructured by increasing its capital through the sale of shares to the private sector,” reads the report.
The commission, whose members included leaders of major private sector organizations — many of whom are familiar with the fierce corporate competition for a new license — appears to have made its stance clear without explicitly opposing the idea.
With this, the government now finds itself caught in a bind. Should it stick to its original plan and move forward with licensing a new exchange? Or should it heed the commission’s advice and shift its focus to privatizing NEPSE?
Government officials say the decision whether to issue the license to the new stock exchange now lies with the SEBON. The process to grant licenses to new stock exchanges is likely to be halted if the government decides to adopt the recommendations of the commission.
According to sources, high-level discussions are underway whether to adopt the recommendation made by the commission in terms of a new stock exchange. Ministries and regulatory bodies are studying the commission’s report, weighing the political and economic implications.
If the commission’s recommendations are adopted, the licensing process for a new stock exchange will likely be scrapped altogether. But if the government decides to stay the course, SEBON will resume its process, evaluating applicants and issuing a license to a new player in Nepal’s financial market.
NEPSE begins restructuring efforts as recommended by Khanal-led commission
Nepal Stock Exchange (NEPSE) has initiated a renewed push to restructure its operations, despite continued hesitation from the government over its future direction.
The move follows fresh pressure from the High-Level Economic Reform Suggestion Commission, which, among other things, advised that NEPSE should sell shares to the private sector as part of its reform agenda.
The Commission led by former Finance Secretary Rameshore Khanal has recommended the government to partially privatize the NEPSE’s shares to enhance market efficiency and competitiveness.
Officials said NEPSE’s management has prepared a new restructuring proposal, which it plans to present to the Board of Directors soon. However, the latest draft leaves key questions unanswered — including how the future shareholding structure will be organized.
This isn’t NEPSE’s first attempt at reform. Nearly 18 months ago, it submitted a restructuring plan in response to a request from then-Finance Minister Dr. Prakash Sharan Mahat. That plan, however, stalled without action. His successor, Maoist leader Barshaman Pun, also showed little interest in moving it forward.
Current Finance Minister Bishnu Poudel, who has been in office for nine months, has similarly not acted on the restructuring file, according to officials.
NEPSE currently operates with a paid-up capital of NPR 1 billion. The government holds a controlling 58.66 percent stake, while Rastriya Banijya Bank owns 11.23 percent, the Employees’ Provident Fund holds 10 percent, Nepal Rastra Bank owns 9.5 percent and Laxmi Sunrise and Prabhu Bank each hold 5 percent.
An earlier restructuring proposal by NEPSE had envisioned boosting its paid-up capital to NPR 3 billion, launching an IPO to sell 30 percent of its shares to the public, bringing in a foreign strategic partner, and inviting additional investments from institutional players.