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The price of gold has dropped by Rs 700 per tola in the domestic market on Monday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow metal is being traded at Rs 112, 300 per tola today. It was traded at Rs 113, 000 per tola on Sunday.

Meanwhile, tejabi gold is being traded at Rs 111, 750 per tola. It was traded at Rs 112, 500 per tola.

Similarly, the silver is being traded at Rs 1,390 per tola today.

Margin lending by banks and financial institutions in Nepal experienced a significant decline over the past two years. However, it appears that investors, who were previously anticipating the central bank to relax restrictions on such loans, are now motivated to avail these loans. In the first month of the current fiscal year, ending in mid-August, margin loans of banks and financial institutions surged by 19.26 percent compared to the same period in the previous fiscal year, reaching Rs 76.53bn. Such loans stood at Rs 64.07bn at mid-Aug 2022. Margin loans refers to loans provided by banks by accepting shares listed on the Nepal Stock Exchange (Nepse) as collateral.

The total margin loans amounted to Rs 50.40bn in the fiscal year 2019/20. It, however, grew by a whopping 110.84 percent to reach Rs 106.28bn in mid-Aug 2021. Concerned by investment of over Rs 100bn in margin loans, the central bank imposed restrictions on such loans. As a result, such loans fell by 24.25 percent to Rs 80.50bn by mid-July 2022, further declining to Rs 64bn in the following month. However, margin loans have started to recover after the central bank eased restrictions on such loans.

The central bank initially restricted margin lending as it viewed share investment as an unproductive sector. The NRB took the decision after margin loans of banks exceeded Rs 1bn. The central bank first put a cap on margin loans at Rs 40m per investor per bank and Rs 120m in total. The introduction of the new margin lending provision had an immediate impact on the market, causing the Nepal Stock Exchange (NEPSE) index to plummet, reaching as low as 1,818 points from the all-time high of 3,198 points. The lower limit of Rs 40m was removed a year later, enabling individuals to borrow up to Rs 120m from a single bank.

Recently, the central bank further relaxed margin lending rules, permitting banks to invest up to Rs 150m for individuals and Rs 200m for institutional investors. However, investors, who had been advocating for the complete removal of lending caps, have not shown much enthusiasm as reflected in the low transaction volume on the stock exchange. Nabil Bank, Global IME Bank, and Nepal Bank Ltd are the largest providers of margin loans in the country. Until the first month of the current fiscal year, ending in mid-August, Nabil Bank had extended Rs 9.68bn in margin loans, while Global IME and Nepal Bank Ltd had invested Rs 6.28bn and Rs 4.09bn, respectively.

However, eight commercial banks have reported declines in margin loans. Rastriya Banijya Bank Ltd, Citizens Bank International, Sanima Bank, NMB Bank, Agricultural Development Bank, NIC Asia, Machhapuchchhre Bank, and Nepal SBI Bank have all observed a decline in their margin loans. While Standard Chartered Bank does not issue margin loans, other commercial banks have seen increases in their margin loans. Banks have extended margin loans from a minimum of Rs 24m to as high as Rs 9bn. Margin loans issued by development have increased by 21.28 percent to Rs 13.85bn as of mid-Aug 2023 compared to the same period in the previous fiscal year. In contrast, Class ‘C’ financial institutions have witnessed a decrease in their investments in margin loans. The total margin loans of finance companies have fallen by 4.17 percent to Rs 3.65bn in the first month of the current fiscal year compared to the same period in the previous fiscal year.

The price of gold has increased by Rs 600 per tola in the domestic market on Friday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 110, 100 per tola today. It was traded at Rs 109, 500 per tola on Thursday.

Meanwhile, tejabi gold is being traded at Rs 109, 550 per tola. It was traded at Rs 109, 000 per tola.

Similarly, the silver is being traded at Rs 1,345 per tola today.

Nepal’s vibrant Dashain market, once characterized by bustling streets full of shoppers and a palpable sense of excitement in the air, is largely subdued as a result of ongoing economic crisis. 

Nepal’s economic downturn has cast a shadow over the traditional fervor, leaving many to ponder on the impacts on sales, transactions, and the overall excitement of the festival season. Recession has brought us to a point where we need to reconsider and reevaluate the dynamics of the Dashain market. It is imperative to delve deeper into the nuanced effects of recession on the Dashain market, assessing whether the economic constraints have dampened the customary zeal and prompted a more restrained approach to spending.

In recent years, the Dashain market has experienced a visible shift in sales and transactions that serve as a barometer of economic health. While the demand for essentials and customary festive items remains steady, the extravagant purchases and splurges seem to have taken a back seat. Consumers are exhibiting a heightened sensitivity towards their financial resources. 

The Fashion Hub, nestled in the heart of New Baneshwor, is the brainchild of Juna Giri. In previous years, the lively echoes of footsteps in her store bore witness to the exuberant spirit of the season, with sales soaring from the auspicious day of Ghatasthapana. However, in the wake of the global pandemic, a subtle transformation has taken place. It’s like a big shift in how people do their Dashain shopping, and Juna’s shop is feeling it too. 

“Before Covid-19 struck, our sales were flourishing. We had about 15 daily visitors, and during Dashain, that number would swell to around 50, starting from Ghatasthapana. However, in the aftermath of the pandemic, customers have shifted to online shopping. But there aren’t as many sales as before,” says Giri. “After Covid-19, walk-in customers have slashed. The same familiar clothes hang on our racks, with few to no new arrivals.”

The hallmark of Dashain market, the hustle and bustle, has been somewhat tempered. The once hectic shoppers, darting from stall to stall, now move with a measured determination. The cacophony of haggling and bargaining, while still present, has taken on a more subdued tone. This recalibration of the shopping experience mirrors a broader societal shift towards a more mindful consumption pattern, in regards to recession. 

There has also been a noticeable surge in online shopping preferences among Dashain celebrants. Instead of rushing from stall to stall, more and more people are choosing to scroll through virtual storefronts from the comfort of their homes. This shift towards e-commerce reflects a broader societal transition towards convenience and accessibility in the shopping experience.

“We opened a TikTok account for our store, and in just a year, we’ve surpassed 38,000 followers. Many of the customers who visit us now say they discovered our store through TikTok,” says Giri.

Much like The Fashion Hub, numerous clothing stores have undergone this transformation. The tradition of haggling and bargaining, while still prevalent in the traditional market, has also been influenced by this digital evolution. Online platforms introduce a different method of negotiation, often involving the use of digital coupons, promotional codes, and comparative shopping, ultimately reshaping how consumers interact with sellers.

Market saturation has intensified the impact of the recession. Consumers now prefer unique, trendy clothing over mass-produced options found in every other store. Rose Pahari, owner of Bellevogue_np, a platform enabling customers to pre-order desired items from the USA, reflects on this shift in consumption patterns. 

“We receive substantial pre-orders for ethnic wear because individuals are inclined towards exclusivity. However, this year has witnessed a decline in consumption. We observe a surge in online bargaining as people become more discerning and prudent with their spending,” says Pahari.

Limiting the uncontrollable spending

Recession has acted as a reality check, prompting consumers to reevaluate their spending habits. While the allure of extravagant purchases remains, a newfound restraint prevails. The Dashain market, once a playground for unrestrained spending, is now a space where thoughtful choices are celebrated.

In a recent report from the Ministry of Finance, concerns arise as government expenditures, including salaries and Dashain allowances, have surpassed income, leading to a negative account balance.

Dhaniram Sharma, joint secretary of the ministry, urges against misconstruing this situation as a sign of distress, explaining that while first-quarter revenue collection fell short of targets, overall revenue is on par with last year’s. This fiscal situation prompts reflection on the age-old tradition of celebrating Dashain with lavishness, sometimes surpassing one’s financial capacity. The government’s provision of Dashain allowances, while well-intentioned, can inadvertently encourage this trend. It’s important to recognize that an extravagant Dashain celebration should not be equated with genuine tradition, but may, at times, stem from a desire to imitate unsustainable practices.

The Dashain market in Nepal stands as a testament to the resilience and adaptability of Nepali culture in the face of economic challenges. While the recession has ushered in a more measured approach to spending, it has not extinguished the fervor of the festival. Instead, it has prompted a reevaluation of priorities, emphasizing the true essence of Dashain—family, togetherness, and the celebration of traditions. As the market evolves, it continues to serve as a reflection of the ever-evolving economic landscape of Nepal.