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The government has proposed a fine of up to Rs 30m for individuals and groups involved in insider trading in the securities market.

Minister for Finance Bishnu Prasad Poudel registered the Securities (First Amendment) Bill, 2024, in the House of Representatives last week. The Bill aims to regulate securities transactions more effectively and incorporates new practices and international standards, with a focus on combating fraud and insider trading.

The proposed legislation significantly increases penalties for insider trading. Individuals and groups involved in fraud and insider trading can face penalties ranging from repayment of the amount involved, an equal fine, or up to three years of imprisonment, or a combination of all these penalties. If the amount involved is known, offenders could face fines ranging from Rs 5m to Rs 30m or up to three years imprisonment. 

As per the existing law, such offenders can be handed a maximum penalty of one year imprisonment.

Likewise, the bill proposes removing chartered accountants and representatives from the Federation of Nepalese Chambers of Commerce and Industry Securities Board of Nepal (Sebon) from sitting on the board of Sebon to avoid conflict of interest. Then FNCCI Vice-president, Chandra Prasad Dhakal, stepped down from the executive board of Sebon in August 2021 after media outlets reported conflict of interest. Dhakal, who was representing FNCCI in the Sebon board, chairs a number of companies listed on Nepal Stock Exchange (Nepse).   

Similar stringent measures have been proposed for individuals and groups providing false transactions, price manipulation and providing misleading information. Such individuals and groups can be slapped fines up to Rs 5m and three years imprisonment, depending on whether the amount involved is known or unknown.

Likewise, the bill introduces new restrictions to prevent conflicts of interest. Former chairpersons and high-ranking officials of the Sebon will be barred from working for listed companies or licensed institutions for two years after leaving their positions. However, this restriction won't apply to political appointees.

The bill also includes provisions for central depository services, derivatives and specialized investment funds such as private equity and venture capital. This is expected to pave the way for introduction of derivative products in the securities market. 

Likewise, it authorizes Sebon to request banking transaction records from the central bank for investigative purposes. “If an investigation is required regarding securities transactions conducted by any individual, company or organized institution, Sebon can request Nepal Rastra Bank (NRB) to obtain relevant transaction records from the concerned bank or financial institution. Upon receiving such a request, the NRB is required to collect the records from the relevant bank or financial institution and provide them to the Board,” the Bill reads.

Sebon, however, will have to keep such records confidential and use them solely for investigative purposes.

Visiting Foreign Secretary of India Vikram Misri paid a courtesy call on Finance Minister Bishnu Prasad Paudel at the latter's office in Singha Durbar today.

On the occasion, they discussed various topics, including economic and development cooperation, expediting the construction of ongoing projects and the mutual relations between the two countries.

The Indian Foreign Secretary arrived in Kathmandu on Sunday in the course of a two-day visit to Nepal at the invitation of Foreign Secretary Sewa Lamsal.

Foreign Secretary Misri paid separate courtesy calls on President Ram Chandra Paudel, Prime Minister KP Sharma Oli, Nepali Congress President Sher Bahadur Deuba and CPN (Maoist Center) Chairman Pushpa Kamal Dahal on Sunday itself.

Nepal’s economic situation is still in a  bad shape. According to the International Monetary Fund, the GDP growth is expected to recover modestly to 3.1 percent in the fiscal year 2023/24 from a weak two percent growth in the previous fiscal year. This achievement was made mainly  due to strong performance of export-oriented sectors and supported by increased agricultural production. 

IMF says capital spending is still weak, however, and imports are recovering only gradually, with year-on-year growth still negative. Political uncertainty continues to act as a headwind to growth. But the bright side is Nepali Congress and CPN-UML have come together to ensure political stability which is likely to contribute to the recovery. 

Nepal Stock Exchange (Nepse) index hit a 26-month high and breached the psychological 2,300-point mark on Tuesday. The stock market rally coincided with CPN-UML Vice-chairperson Bishnu Prasad Paudel’s return to the finance ministry for his third stint as the finance minister. The stock market rally bodes well for Paudel who has inherited a troubled economy. The government has struggled to increase capital expenditure, stimulate loan demand, boost private sector confidence and make the market dynamic. 

Paudel needs to restore investor confidence and stimulate economic growth. He has signaled his intent to focus on production and employment which is necessary given the current state of Nepal’s economy.  The banking sector has seen only a five percent increase in credit growth which is far below the government’s target of 11 percent. The sluggish credit growth is indicative of a broader economic malaise that Paudel must address.

The new finance minister also needs to tackle the issue of idle capital in the banking sector. With banks sitting on approximately Rs 700bn of loanable funds, Paudel needs to create an environment conducive to investment. This will be possible only through policy reforms and by bringing different initiatives to boost investor confidence and create opportunities for investments.

Effective implementation of the new fiscal budget will be another significant challenge for the new finance minister. Paudel must navigate the complexities of implementing a budget prepared by his predecessor. The fact that Paudel’s party, UML, publicly expressed dissatisfaction with certain aspects of the budget will make things further complicated for Paudel.

Minister Paudel also faces the challenge of improving public expenditure management and revenue collection. With capital expenditure falling short and revenue collection missing targets once again in the fiscal year 2023/24, Paudel must find ways to enhance government spending capacity and boost revenue streams for the government. 

Infrastructure development will be another challenging issue for Paudel. The Federation of Contractors Associations of Nepal (FCAN), the industry lobby of construction entrepreneurs, has claimed that the government owes contractors around Rs 40bn billion for completed works. It remains to be seen how Paudel resolves this issue and kick-starts new infrastructure projects which are crucial for economic growth and job creation.

Paudel must also address the challenges in the financial markets. The process of appointing a new chairperson for the Securities Board of Nepal (Sebon) has seen legal complexities. Many are saying that this contributed to the failure of the ruling coalition of UML and CPN (Maoist Center). The new finance minister will need to handle this issue carefully to ensure stability in the stock market which is often described as a mirror of the economy.

The new finance minister will also need to tackle inflation and maintain price stability. This will require careful management of monetary policy in coordination with the central bank. The finance minister enjoys a good rapport with Nepal Rastra Bank Governor Maha Prasad Adhikari who was appointed by the government led by his party.  

The finance minister will need to demonstrate strong leadership and implement effective policies to regain public and investor confidence. For this, he will have to introduce investor-friendly policies, streamline bureaucratic processes, combat corruption and improve the overall business environment. Additionally, he will need to work closely with other government agencies, the private sector, and international development partners to implement comprehensive economic reforms.

Paudel’s previous experience as finance minister in 2015 and 2021-2022 may prove valuable in navigating these challenges. However, overcoming these obstacles will require not only experience but also innovation, determination, and the ability to build consensus among various stakeholders.

President Ram Chandra Paudel administered the oath of office and secrecy to newly-appointed Deputy Prime Ministers Prakash Man Singh and Bishnu Prasad Paudel today.

They took the oath amidst a special ceremony held at Rashtrapati Bhawan, Sheetal Niwas this morning.

Singh took the oath as the DPM and Minister for Urban Development while Paudel as the DPM and Minister for Finance.

Vice President Ramsahay Prasad Yadav, Prime Minister KP Sharma Oli, Chief Justice Bishwambhar Prasad Shrestha, Speaker Devraj Ghimire, National Assembly chair Narayan Prasad Dahal, outgoing Prime Minister Pushpa Kamal Dahal 'Prachanda', former Prime Ministers Sher Bahadur Deuba, Jhalnath Khanal and Dr Baburam Bhattarai, leaders of various political parties, lawmakers, high-ranking officials of the Government of Nepal, chiefs of security agencies, heads and representatives of foreign diplomatic missions in Nepal and distinguished persons contributing in various fields of social life were present in the ceremony.

CPN-UML Vice Chair Bishnu Prasad Paudel has urged the main opposition Nepali Congress to follow the democratic practice and end the deadlock in the Parliament.

In today's meeting of the House of Representatives, Poudel supported the proposal the Prime Minister Pushpa Kamal Dahal presented in the House seeking a vote of confidence in accordance with Article 100, Sub-article 2 of the Constitution of Nepal and hoped for end to the deadlock in the Parliament for political stability in the country.

"I request all the parties to support the government to speed up development in the country while maintaining political stability. I call upon the Nepali Congress to reconsider its role and follow democratic practices in the Parliament," Poudel said.

Vice Chair Poudel claimed that the current government has given a message of guaranteeing good governance, disillusionment surfaced at the civil level has been eradicated and hope is being communicated through recent efforts made by the government.

The NC has long been obstructing the parliamentary proceedings, alleging the involvement of Deputy Prime Minister Lamichhane in the fraud and demanding the formation of a parliamentary committee to ensure a fair investigation into the case whereas the CPN-UML and RSP in particular have made it clear in no uncertain terms that an individual-centric probe is simply unacceptable.