Preparation to Redirect Institutional Funds Concentrated in Bank Deposits to Capital Market

Kathmandu - The government is preparing to gradually mobilize the funds concentrated in bank deposits of large institutional investors towards the securities market. The Ministry of Finance's 'Capital Market Strengthening and Revival Plan, 2083' includes plans to rebalance the portfolios of institutional investors to enable long-term capital to enter the market.

The government has concluded that the investments of institutions such as Employees' Provident Fund, Citizen Investment Trust, Social Security Fund, insurance companies, and mutual funds are overly concentrated in bank deposits. The action plan mentions that legal, policy, and structural reforms will be made by the end of Mangsir 2083 to make it easier for these institutions to invest in securities.

Once the proposed reforms are implemented, institutional investors will find it easier to allocate a certain portion of their total investment into shares, bonds, and other securities permitted by regulators. This could pave the way for some of the institutional funds currently piled in bank deposits to enter the capital market.