Nepal, July 8 -- The Securities Board of Nepal (SEBON) has paved the way for banks and financial institutions (BFIs) to issue their Perpetual Non-Cumulative Preference Shares (PNCPS), which is expected to minimize pressure on capital adequacy fund of the entities. Experts say this move will allow BFIs to increase their lending.

Through the ninth amendment to the 'Securities Issuance and Distribution Directive,' the SEBON has come up with this provision for the BFIs. Although Nepal Rastra Bank last year permitted the BFIs to float their PNCPS, they were unable to do so due to SEBON's failure to streamline its law.

Unlike the ordinary type preference shares, the PNCPS do not accumulate unpaid dividends from prior years. Under this type, ...