Financial Market in Nepal

The financial market in Nepal is not basically different from the financial market in general. Hence, it has been explained very briefly here.

The financial market is still in infancy in Nepal. Since, the financial market plays an important role in the efficient distribution and use of resources, it is extremely important in a capital-poor country like Nepal.

The system of lending and borrowing in an unorganised way id prevalent in Nepal since the ancient time. Even today substantial portion of rural credit is available from the unorganised. The system of providing loan through the organised sector was initiated by Tijarath Adda established in 1933 B.S. The scope of this institution which made available loans only to the government employees in the beginning was limited.

The system of collecting deposit and granting loans in the organised sector had started with the establishment of Nepal Bank Ltd. in 1994 B.S The mobilisation of funds by selling securities to the general public had, however, started with the establishment of Biratnagar Jute Mill in 1993 B.S. The organised transaction of securities started in an organised way with the establishment of Security Market Centre (present Nepal Stock Exchange) in 2033 B.S.

There are many changes taking place in the financial system of Nepal due to financial liberalisation. The business activities are increasing rapidly. The situation of monopoly has come to an end and the situation f competition has emerged in Nepalese financial system. many banks and financial institutions have been established to cater the credit need of individuals and business firms.