Kathmandu. The stakeholders have expressed confidence that the ‘Capital Market Strengthening and Revival Action Plan, 2083’ released by the Ministry of Finance has brought a policy to boost the morale of the overall capital market sector. The action plan brought by the Ministry of Finance is believed to strengthen the private sector by making the overall capital market dynamic.

Priya Raj Regmi, president of the capital market committee of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), has expressed the belief that the capital market consolidation and revival action plan brought by the Ministry of Finance is implemented in letter and spirit.

“The action plan unveiled by the Ministry of Finance on Monday is very revolutionary and progressive in the capital market. “The Finance Ministry has also revised the rate of capital gains tax, short-term and long-term transactions, which has also added excitement to the stock market. ’

The action plan also proposes to improve the existing tax regime to encourage long-term investment in the stock market. It has been proposed to cap the gains from listed entities at 3.75 per cent and 5 per cent on gains derived from interests owned for more than 365 days or less.

Earlier, in the budget of the current financial year, the capital gains tax was fixed at 10 percent in the short term and 7.5 percent in the long term. Due to which the investors are scared, he said.

Chairman Regmi said that the action plan of the Ministry of Finance has been brought to encourage institutional investors. “Due to this policy, the entry of institutional investors into the capital market will definitely help in controlling unnecessary fluctuations in the market. “This policy has been brought in such a way as to encourage small, medium and institutional investors,” he said. ’

Former president of Nepal Investors’ Forum, Chhote Lal Rauniyar, said that the action plan unveiled on Monday will have a positive impact on the overall situation as it addresses many issues in the capital market sector. “The government has shown leniency by reducing the capital gains tax on a large percentage of shares than what we had demanded. “This action plan has also sent a message that the government is definitely trying to improve the capital market,” he said. He said that the rule that allows the capital market to adjust even if it is at a loss will definitely give a positive flow to the capital market.

According to the action plan, the banks and financial institutions will have to formulate an investment policy to reduce the ‘speculative risk’ on the investment made in the secondary market of securities. According to the action plan, the Board of Directors of the banks and financial institutions of Nepal Rastra Bank will have to make arrangements at the earliest to determine the investment policy so that the periodic limit of such investment is at least 45 days.

Former President Rauniyar said that this provision has also sent a positive message to the banks and financial institutions to buy and sell shares without any hindrance. Earlier, the limit period of investment of banks and financial institutions was six months. Former President Rauniyar said that the policy of allowing non-resident Nepalis to enter the secondary market is also to make the market dynamic and send a positive message to the economy.

The action plan incorporates reforms in primary and secondary markets, development of new financial instruments, expansion of institutional investment, development of bond market, restructuring of NEPSE, entry of Non-Resident Nepalis in the secondary market, reform of tax system and review of capital market investment of banks and financial institutions, among others.

Similarly, a policy has been put forward to make mutual funds a professional, diversified, transparent, risk-aware, technology-friendly and long-term investment pillar to develop instruments such as bond market, money market and exchange traded funds (ETFs). For this, the board will immediately publish the policy and prepare the necessary guidelines and infrastructure by mid-November.

Not only this, the action plan has also given priority to institutional reform and strengthening of the securities broker business.

The Board has the goal of transforming brokers into a modern, professional, robust, technology-friendly and multi-dimensional securities financial service provider as per the international practices and standards by immediately unveiling the policy.

The action plan also includes the drafting of separate bills related to regulatory and market infrastructure to make timely reforms in the Securities Act, 2063. It will lay the legal basis for the operation of instruments such as margin lending, inter-day trading, securities lending and borrowing and short selling.