Mutual Funds in Nepal in 2026: SEBON's Seed-Capital Change, the Price-Discovery White Paper, and a Rs 1,313 Crore Cash Pile (as of Early August 2026)

Nepal's mutual fund landscape saw two notable regulatory developments in the first half of 2026, alongside a cash buildup that has persisted through the summer. The Securities Board of Nepal (SEBON) issued a seed-capital relaxation for scheme sponsors in January, and later circulated a white paper on price-discovery mechanisms that remains in the proposal stage. Meanwhile, aggregate cash holdings across SEBON-regulated funds stood at Rs 1,313 crore as of early August 2026, according to figures reported by merolagani and myRepublica.

Seed-capital relaxation takes effect

In January 2026, SEBON amended the sponsor seed-capital requirement for new mutual fund schemes. The change allows sponsors to meet part of their obligation through securities rather than solely in cash, a move intended to lower entry barriers for asset managers. The amendment was published in the Nepal Gazette and forms part of the Mutual Fund Regulation 2010 (as amended). Scheme sponsors must still retain a minimum stake, but the form of that stake now has more flexibility.

Price-discovery white paper: proposals, not rules

SEBON also released a consultation paper on price discovery for mutual fund units, particularly relevant for closed-end schemes that trade on NEPSE. The document floats ideas such as mandatory market-making, revised NAV dissemination timelines, and potential circuit-breaker mechanisms. It is not a directive. No implementation date has been announced, and the feedback window was still open as of late September. Until a formal circular is issued, the existing NAV computation and disclosure framework continues unchanged.

Cash pile holds at Rs 1,313 crore (early August 2026)

Data compiled from fund disclosures show that Nepal-domiciled mutual funds collectively held Rs 1,313 crore in cash and cash equivalents as of early August 2026. The figure appears in reports from merolagani and myRepublica, both citing fund monthly portfolios. Single-source disclosure: these totals are not site-confirmed by SEBON or NEPSE and should be treated as indicative aggregates rather than verified sector-wide numbers.

Some fund managers have indicated in September filings that they are actively deploying cash into equities and fixed-income instruments. However, no attributable rupee figure for new deployments has been published at the sector level, so the contrast between reported buying behaviour and the elevated aggregate cannot be quantified.

How the mechanics work today

NAV computation

Net Asset Value per unit is calculated daily by dividing the scheme's net assets (assets minus liabilities) by outstanding units. Valuation follows the accounting standards prescribed by the Institute of Chartered Accountants of Nepal, aligned with NFRS where applicable. Equity holdings are marked to market using NEPSE closing prices; fixed-income instruments use yield-curve benchmarks published by Nepal Rastra Bank.

Closed-end vs open-end structure

Closed-end funds list on NEPSE after the New Fund Offer period and trade at market prices that can deviate from NAV. Open-end funds transact directly with the asset manager at the day's NAV. Both structures fall under the Mutual Fund Regulation 2010 and subsequent directives.

Maturity and redemption

Closed-end schemes have a fixed tenure, typically seven to ten years, after which they are wound up and proceeds distributed to unit holders. Early redemption is not permitted; investors exit via the secondary market. Open-end schemes allow continuous subscription and redemption at NAV, subject to exit loads where disclosed. No 2026 amendment has altered these maturity or redemption rules, though verification against the latest SEBON directive is pending.

Cash allocation limits

The regulation caps cash and cash equivalents at a percentage of net assets, with the exact limit specified in the scheme's offer document. Funds may hold cash for liquidity, redemptions, or tactical positioning. Whether the January 2026 amendment adjusted this cap could not be confirmed from the primary instrument as of writing.

What remains unclear

• The final shape and timeline of the price-discovery proposals — whether mandatory market-making or revised NAV rules will be adopted, and when.
• Whether any 2026 directive has modified closed-end maturity provisions or cash-allocation ceilings; the primary SEBON instrument was not accessible for verification.
• The single-source status of the September deployment reports — no aggregated, attributable deployment figure has been released by SEBON or NEPSE.

Background and further reading

For readers wanting the original announcements, SEBON's website hosts the January 2026 Gazette notification and the price-discovery consultation paper. NEPSE's mutual fund section lists all listed schemes with latest NAVs and trading data. Earlier news summaries from Wikipedia (accessed 20 September 2026) and Ratopati provide chronological context but are not primary sources for this article.