Sebon mulls over licensing a new stock exchange

The government is planning to give licence to a new stock exchange before the election.

The Securities Board of Nepal (Sebon) has approved the amendment to the Securities Market Operation Regulations 2007 last week and sent it to the Finance Ministry for ‘further processes’. The ministry will then present it to the cabinet for final approval. The government is in haste to give licence to a new stock exchange as the election is nearing, and many smell huge money behind it.

The amendment to the Securities Markets Regulations 2007 has increased the paid-up capital by 6 times to Rs 3 billion from the existing Rs 50 million, the board confirmed, adding that other institutional investors, except the banks and financial institutions (BFIs), can also invest in the new exchange. At present, only banks, financial institutions, securities traders and listed organisations can invest in shares of the stock exchange. “Any private and public limited company can invest in the new stock exchange company that will be a complete private entity,” the amendment reads.

Likewise, the investor can hold up to 15 per cent of the shares in the new stock exchange, unlike the current rule of 10 per cent, according to the amendment. Investors can hold up to 15 per cent stakes in banks and financial institutions, and also insurance company. “Thus, the board has followed the banking and insurance regulator,” justified the board. However, an individual investor cannot invest.

There are two schools of thought on necessity new stock exchange; for a small market like Nepal. One claims that there is no need of another stock exchange, and the other claims that private stock exchange can make the current Nepal Stock Exchange (Nepse) more competitive.

Some business groups are lobbying for a new stock exchange, whereas the government has long been planning, without success, to divest its stakes in Nepse and make it a complete private entity. And providing licence for a new stock exchange before election also raises eye brows. Today, addressing a programme in Kathmandu, CPN Maoist (Centre) chair Puspa Kamal Dahal ‘Prachanda’ said that his party needs money to win election, and the capitalists has money.

“That’s why the controversial Janardan Sharma has been reappointed as finance minister for the second time, giving a clearance from the parliamentary probe committee after the CCTV scam on the night of budget,” informed a source at the Finance Ministry. “The purpose of giving clearance to Sharma and reappointment as finance minister will be seen in the days to come,” the source added.

The board, however, cites an expanding volume of the stock trading recently, and stakeholders demand to give license to a new stock exchange.

Currently, there is only one stock exchange, Nepal Stock Exchange (Nepse), where securities like stocks and bonds are traded. The Nepal Stock Exchange (Nepse) – also the front line regulator of securities trading in the country – has 58.66 per cent stake of the government, 14.60 er cent stake of Nepal Rastra Bank (NRB), 10 per cent stake of Employees Provident Fund (EPF), and 6.14 per cent of Rastriya Banijya Bank (RBB).

Nepal Infrastructure Bank gets operating licence

Nepal Infrastructure Bank has today received operating license as a National Level Infrastructure Development Bank from the central bank.
Nepal Infrastructure Bank has received operating license to conduct financial transaction as per the Banking and Financial Institution Act, 2073 clause 107, the bank said in a press note. "The bank is established in joint effort and investment by government along with various commercial banks, insurance companies, microfinance, private companies and group of business entrepreneurs of Nepal," it reads, adding that the bank – registered in the Office of Company Registrar on June 8, 2018 – has received operating licence from the Governor of Nepal Rastra Bank Dr Chiranjibi Nepal, as a national level Infrastructure Development Bank today.
The bank with authorised capital of Rs 40 billion, issued capital of Rs 20 billion and paid up capital Rs 12 billion has 10 per cent government share and 90 per cent share from private sector.
The prime objective of the bank is to play vital role in the infrastructure development of the nation more specifically in the area of construction and development of transportation, agriculture, energy, tourism, SEZ, advanced urbanisation infrastructure, information technology (IT) along with other areas of infrastructure, the press note reads, adding that the bank shall strive to bringing everyone together – public as well as private – in order to achieve its core objectives including infrastructure financing; sourcing of long term funds from international and domestic capital market; and investing on shares of the companies operating in Infrastructure development and other services offered by the bank.

Three more firms get Insurance licence

Three more life insurance companies have obtained operating licence from the Insurance Board today.
The insurance sector regulator granted Sun Nepal Life Insurance, Reliance Life Insurance and Reliable Life Insurance, according to Insurance Board (IB).
Altogether six new life insurance companies have obtained the operating licence since the the board resumed granting licence to the companies, whose applications were pending since long.
Earlier the board had granted operating licence to three life insurance companies including IME Life Insurance, Union Life and Jyoti Insurance, making a total of six new players. The entry of new life insurance companies in the market has made a total number of life insurance companies in the country to 15.
After increasing the paid-up capital requirement through the ‘Directives on Insurer Registration and Insurance Business Operation’ to Rs 2 billion and Rs 1 billion for life and non-life insurance companies, respectively, the insurance sector regulator has started granting licence. The companies that had submitted applications in the fiscal year 2007-08 were given three weeks’ time to resubmit applications with new capital requirement.
Earlier, Life Insurance companies need to have Rs 500 million paid-up capital and Rs 250 million for non-life firms.
Meanwhile, the board is also planning process for non-life insurance companies. The board has received four applications – from General Insurance, Sanima Insurance, Ajod Insurance and Manakamana Insurance – for the operating licence of non-life insurance companies.
There are currently 17 non-life insurance companies in operation in Nepal.