Kathmandu. Mahesh Acharya, joint secretary at the Ministry of Finance, said that the 10-unit policy implemented in the securities market has brought distortion in the investment culture and it needs to be reviewed. He said this at a meeting of the Finance Committee on Wednesday.

Acharya said that due to the 10-unit policy, the mentality of getting primary shares (IPO) has increased in the market ‘like a lottery’ rather than a long-term investment. This, he said, encouraged expectations that the company’s fundamentals, financial statements and dividend potential would rise in value in the short term.

“The tendency to invest in 10 units is like a lottery. Such small investors should have been encouraged to invest through mutual funds,” he said. According to him, the tendency to invest in the expectation of increasing the price rather than the culture of investing by studying the company’s prospectus has prevailed in the market and there is a situation of agitation as soon as the price decreases.

Acharya also pointed out that lack of financial literacy is the main challenge in the stock market. “A lot of people have stopped reading the prospectus of the company when the IPO is launched. This has undermined a healthy investment culture,” he said.

He said Nepal was making progress to get out of the International Grey List for the Control of Money Laundering and Terrorist Financing (TPI) Index. According to him, out of the 15 action plans submitted by the Financial Action Task Force (FATF) to Nepal, four have been completed so far.

He expressed the belief that Nepal could get out of the grey list at the present pace if there was effective coordination between the Securities Board, Nepal Insurance Authority, regulatory bodies and the government. He said that the face-to-face assessment in Malaysia in September will also be important.

According to Acharya, the basis for Nepal to get out of the grey list soon is strong as investigations into big cases related to money laundering, tightening of regulatory supervision and improvement in implementation after the formation of the incumbent government.