Nepal Stock Exchange (Nepse) has urged the clearing banks to enforce the electronic transfer system that facilitates the online settlement of payment from the investor’s bank account when purchasing or selling stocks on Nepse.

Out of the four clearing banks, only Nepal Investment Bank Limited (NIBL) provides such a service to customers. The remaining three, Global IME Bank, Siddhartha Bank and Prabhu Bank, have failed to introduce such facility to their customers. All four banks were licenced by Nepse.

NIBL operates as the lead bank that functions as the focal institution to handle the overall clearing process.

At a time when investors are facing problems in using the full-fledged online trading platform ‘Nepse Online Trading System (NOTS)’, the bourse has been mulling prompt settlement of payment for transactions.

With a new system in place, investors can post the purchase and sales order via an online system, however, they still need to visit the stockbrokers to settle the transaction amount. Nepse Spokesperson Murahari Parajuli said they had requested the other three clearing banks to implement the online payment settlement system. As of now, only NIBL has installed a YCO developed software that allows the bank to work on the order of the investors and complete the transaction. “The system allows the bank to coordinate with all 50 brokering companies, Nepse and their customers,” Parajuli said.

Nepse claims that NOTS supports the clearing of payment through the electronic system. “The new system possesses scalable and configurable interface that facilitates the online payment system if it is carried out by the other three clearing banks,” Parajuli said.

After Nepse implemented NOTS, a number of commercial banks have introduced online payment settlement schemes to attract customers looking to invest in the country’s only seconday market.

On Tuesday, Sanima Bank announced its ‘Three in One Account’, offering investors the facility to settle their transaction online.  

As per Sanima Bank, under the scheme, the bank opens a separate ‘investment account’ for the bank’s customers who wish to invest in the secondary market.

“On the investors’ request, we coordinate with Sanima Capital to contact brokers to post the purchase or sales order. The related transactions on buying or selling the shares are settled through the investment account,” Sanima Bank’s Chief Executive Officer Bhuvan Dahal said.

Dahal said the system enables the bank’s clients to receive payment on the same day when the transaction is settled. “The system could also help increase the size of the market as it is also compatible with Nepse’s online trading system and helps in prompt settlement of the money transaction,” Dahal said.

Officials of the Securities Board of Nepal (Sebon) however are skeptical on the legitimacy of the offering forwarded by Sanima Bank. According to them, the existing law does not allow financial institutions to deal in stocks trading.

Sebon’s Deputy Spokesperson Niranjaya Ghimire said financial institutions could only transfer their clients’ money.

“However, the banks cannot deal with stockbrokers directly,” said Ghimire, adding that the regulator would conduct an enquiry on the new offering forwarded by Sanima Bank. Meanwhile, Nepse in its fourth day of launching the online system, gained 13.97 points to close at 1,207.31 points on Tuesday. Parajuli said that an improvement in the functioning of the online trading platform and its information display system had encouraged investors to invest in the secondary market. As a result, the transaction volume also increased to Rs174.15 million, compared to the trading amount of Rs99 million and Rs133.81 million on Sunday and Monday respectively.