After the only stock market of Nepal reacted feverishly in the aftermath of newly unveiled monetary policy Nepal Rastra Bank, the central bank on Monday issued a directive to all the commercial banks to issue bonus shares to check further downfall in the stock market.

Investors lost nearly Rs 8,000 million over the last ten days after the central bank unveiled its new monetary policy on July 23 introducing some changes in the provisions related to paid up capital of the commercial banks.

NRB officials, however, said the new monetary policy was not responsible for downward trend of the share market.

According to the current provision, a minimum paid up capital of Rs 1,000 million is required fro the establishment of a new national level commercial bank. But the NRB revised its policy and said the banks would have to now make provision of Rs 500 million only in their paid-up capital and rest in the form of ‘capital adjustment fund.’ Critics said the new provision would benefit existing commercial banks who do not need to go to the public to raise money.

The investors, who had expected banks to issue bonus and rights shares to attract new investors to fulfill the NRB provision, started selling their stocks in a hurry. Prices of shares of Standard Chartered Bank, for example, came down to around Rs 3,000 from over Rs 3,800 earlier within a week.

Talking to Nepalnews, president of Nepal Stock Broker Association Navaraj Pokhrel said the central bank should consider probable implications well before introducing any new policy.

An urgent meeting of the NRB board on Sunday evening decided to expand the limit of paid up capital to Rs 800 million from Rs 500 million, officials said.

As there are no institutional investors in Nepal, over 700,000 individual investors sell and buy stocks in the only share market of the country, Nepal Stock Exchange Ltd (NEPSE). Annual transaction of shares at NEPSE stands at over 3.5 billion rupees per annum, according to officials.