The Securities Board of Nepal (SEBON) is once again embroiled in controversy as Chairman Santosh Narayan Shrestha calls a crucial board meeting on Thursday, with the sole agenda of issuing a license to a new stock exchange.
Despite repeated attempts, Chairman Shrestha has been unable to secure consensus within the board to move forward with the license issuance—an issue mired in dispute for years. Applications under consideration include Himalayan Stock Exchange, National Stock Exchange, and Annapurna Stock Exchange.
Sources say a majority of board members remain reluctant to endorse the proposal, citing concerns over the influence of intermediaries and the potential legal repercussions. Four of the seven board members are reportedly unwilling to approve the license, fearing that any hasty decision could later implicate them in corruption investigations.
Two members of the board—ICAN representative CA Neel Bahadur Saru Magar and expert member Bhola Nath Dhungana—are nearing the end of their terms, and have distanced themselves from controversial decisions. The board includes representatives from the Ministry of Finance, Ministry of Law, Nepal Rastra Bank (NRB), the Federation of Nepalese Chambers of Commerce and Industry, ICAN, and one independent expert.
Chairman Shrestha, who is under investigation by the Commission for the Investigation of Abuse of Authority (CIAA), has been accused of delaying IPO approvals for hydropower companies and demanding commissions of up to 5–7% through middlemen. The CIAA has raided SEBON’s office and seized documents related to the matter.
Sources close to the board allege that intermediaries involved in Shrestha’s appointment are pressuring for license issuance in favor of certain applicants. This has further complicated the decision-making process, with members wary of endorsing a decision that could later be scrutinized by the CIAA.
Even Nepal Rastra Bank’s representative Revati Prasad Nepal, a key figure on the board, has expressed reservations. Chairman Shrestha, however, is reportedly lobbying to bring him on board to secure a majority decision.
A 2024 study committee led by NRB Deputy Governor Chintamani Shivakoti had recommended issuing a new stock exchange license, introducing foreign strategic partners, and restructuring NEPSE to enhance market competitiveness.
The Cabinet forwarded this report to the Ministry of Finance, which in turn asked SEBON to implement it earlier this year.
While the Supreme Court dismissed a writ petition against the licensing process in March, clearing legal hurdles, SEBON has not yet been able to finalize the license decision due to internal discord.
Meanwhile, NEPSE—where the Ministry of Finance holds a 58.66% stake and NRB holds 9.5%—continues to face institutional stagnation.
Although NEPSE has sought approval for a share restructuring plan, the Finance Ministry has shown little urgency in supporting it, raising concerns that the government is prioritizing new entrants over strengthening existing infrastructure.
A previous high-level economic reform commission led by Rameshwar Khanal had advised that NEPSE's capacity be strengthened and its ownership restructured before allowing competition. Despite public commitments to implement these recommendations, officials have failed to act, leaving NEPSE employees increasingly frustrated.
As SEBON grapples with internal division and external pressure, the future of Nepal’s stock market reform remains uncertain.
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