Central bank has asked the banks and financial institutions to team up and form Asset Management Company (AMC).
"Since long the government has tried to form Asset Management Company, but has not been successful," said central bank governor Dr Yubraj Khatiwada.
"The banks and financial institutions should come forward and can form Asset Management Company as problems in the real estate sector have yet not been solved," he said, adding that the government could become partner in the private sector initiative.
Asset Management Company is a company that invests its clients' pooled fund into securities that match its declared financial objectives. It provides investors with more diversification and investing options than they would have by themselves. Mutual funds, hedge funds and pension plans are all run by asset management companies. They earn income by charging service fees to their clients.
Asset Management Company offers its clients more diversification because they have a larger pool of resources than the individual investor. Pooling assets together andpaying out proportional returns allows investors to avoid minimum investment requirements often required when purchasing securities on their own, as well as the ability to invest in a larger set of securities with a smaller investment.
Apart from Asset Management Company, the credit rating agency will also help boost the current market, the governor said, adding that one credit rating agency is in pipeline and the formation of Asset Management Company will help both capital market and real estate grow. Both the sector is passing through a difficult period currently.
"But real estate sector is picking up slowly, though it has its own internal problems that needs to be solved to expand," Khatiwada added.
Currently, the developers have started more housing and apartments projects not only in the Valley but also outside the Valley like Hetauda and Pokhara, where there is still demand according to the developers.
The government has also encouraged the developers to go outside the valley as the organised settlement is a must for the development of the districts that have higher economic activities.
The government has also asked the private sector to engage in the government-planned 10 big cities on the Puspalal Lokmarga that is under construction.