Investing in Primary Share Market in Nepal ?

The culture of investing in Primary share market is growing and the hype is really up these days. It was just years back when applicants were compelled to stay in long queues, fill the manual forms and go through a tiring process to apply for IPO ( Initial Public Offering) and FPO (Further/Follow up Public Offering) . Thanks to the modern technology and the digital transformation in the stock market that has made the process easier and accessible for a large number of interested applicants. For instance, if we see the craze of the last IPO issue of Mahila Laghubitta, which saw almost 60 times of over subscription with more than 14 lakh applicants for the issue. With new investors coming in the market, the future seems really promising.

If you haven’t ever applied for any IPO or don’t know where to start, this article is for newbie like you.

Let’s first understand the basics. Investing is in itself a very vague topic and it is wise to start with few information, ace them and learn new things slowly.

IPO (Initial Public Offering) is the offering made by Public companies after issuing a prospects and approval from the securities board. The applicants can apply for desired minimum units of Shares at the dates when the issue is open. There are many websites that lets you know how many units are being offered, when and by which company. Being curious and Updated is the key for Investing.

How much do you need to Enter in Primary Market ?

It’s just from a minimum of NPR 1000. Mostly IPO are issued at the rate of  NPR 100. In some cases, it is issued at a premium price too. For example the FPO of Butwal Power was issued at NPR 501 where NPR 401 was premium.

There are some basics things that you need before you can apply for IPO/FPO of shares, mutual funds, debentures. We will discuss about the types in next article.

What do you need to be able to apply?

1. Bank Account: It can be opened in any Commercial banks or Financial institutions approved by NRB. You will need photo, Citizenship, Birth Certificate in case of minor and other documents as per the policy of the Institution to open an Account.
2. DEMAT Account: It is the account where your shares will be stored electronically, like how cash is stored, credited and debited in the Bank Account. You can open the DEMAT account in any capital. Most banks have a subsidiary capital so you can also open your account there. The DEMAT account can be opened in Stock brokers and Merchant bankers too. It’s referred as BOID and consists of 16 digits.
3. C-ASBA Number or CRN: CRN stands for C-ASBA Registration Number which is a unique number given by the Bank from which you’re applying the shares. It links your demat number and the bank account to create a unique ID for each one of us. CRN is required to fill the form for applying IPO both in electronic form and manual form. It is used to block the funds from your account during the allotment process. If you’re alloted the fund is deduced and if it isn’t the fund is released.
4. Meroshare Account (Optional But Recommended): This is like the internet banking or mobile banking facility of banks but meroshare account is for shares. You can take this service from the same institution where you got your DEMAT account number. Once you apply and pay NPR 50 for a year, you will get the facility to apply online for the IPO/FPO. In the provided email you will receive the credentials, the password needs to be changed at your end.

So if we summarize: You need a Bank Account and CRN from the same bank. You will need a DEMAT account and meroshare details from the broker or merchant banker or Capital. Most banks have all these services so you can avail them from the same place at your nearest branch. Depending on the service getting a DEMAT number can take you 1-3 working days. Please make sure to follow up if delay is more than 3 working days. These days many capital are offering opening online accounts too.

If you don’t have Meroshare account, you can still go at physical branches and fill the manual form available in Bank and Financial Institution, Merchant Banks and/or Stock Brokers.

Is it the right time?

Today is a right day to start saving, investing and making a step for financial freedom. So Start TODAY. Prepare all the required accounts before the next issue.

It all seems confusing at the beginning. Please remember that everyone started at some point. I hope this article is your point of beginning. There are a lot of things that we keep learning in the process. You can start your investing journey from a mere NPR 1000 rupees. Investing in a company means getting the returns until the company is growing, making profits and distributing. Primary market so far seems a risk-free investment opportunity for long term.

Preparing and opening all this accounts will surely require some time, energy and understanding at the beginning but once you are done, applying is just few clicks away.

I will also write in a series of other articles about when,where and how to invest in secondary market, trading and also some resources to improve your understanding in the field. You can reach out to me at my email if you have any specific queries at : Rushagiri77@gmail.com