Sunday, May 20, 2018

Central bank issues LoI to set up infrastructure bank

The central bank today issued a Letter of Intent (LoI) to Emerging Nepal to establish Infrastructure Development Bank (IDB) after it has deposited 50 per cent of the total paid up capital of Rs 20 billion.
The proposed Infrastructure Development Bank – that will be focusing on financing mega infrastructure projects – is the country's first infrastructure bank. It has 40 promoters, including five commercial banks, a number of insurance companies and corporate houses. Former chief secretary Bimal Koirala has been named the chairman of the proposed bank.
The green signal in principle from the central bank allows the bank to proceed with setting up the infrastructure of the bank. Expected to start operations in six months, the proposed bank will be able to make equity investments in infrastructure development projects and open letters of credit (LC) to import equipment required by them. Likewise, the bank can issue domestic and foreign currency bonds, mobilise long-term deposits and issue debentures to mobilise financial resources for infrastructure projects.
The central bank spokesperson Narayan Prasad Paudel said that Nepal Rastra Bank has agreed in principle to the Infrastructure Development Bank. The central bank allowed it to proceed with the establishment process after it deposited 45 per cent of the paid-up capital in six commercial banks. It has deposited 5 per cent of the paid-up capital during the application phase, he said, adding that the bank has to register as a public limited company with the Office of the Company Registrar within the six months after receiving the Letter of Intent (LoI) from the central bank. "After the preparations of logistics including developing the necessary software and appointing senior officials, the central bank will carry out an inspection before issuing the operating licence."
Emerging Nepal had submitted an application to establish an infrastructure bank on August 30.
The government and promoters will hold 10 per cent and 50 per cent of the shares respectively, whereas remaining 40 per cent will be floated to the public.

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