Foreign investors allowed to keep 20-85 pct stake in infrastructure bank

Nepal's central bank on Friday unveiled a licensing policy for the establishment of infrastructure development banks in the country by opening the door for foreign investors to keep 20-85 percent in such banks.

As per the criteria set by Nepal Rastra Bank (NRB), an infrastructure development bank should have paid up capital of at least 20 billion Nepali rupees (194 million U.S. dollar).

Minimum paid up capital set for commercial however stands at 8 billion Nepali rupees. "As the minimum capital required for an infrastructure development bank is higher, we will encourage foreign investors to make investment," Rajendra Pandit, assistant spokesperson of NRB, told Xinhua on Friday.

Although the Nepali government has been making policy announcements for the establishment of such banks in order to finance the infrastructure sector for the last few years, no other concrete measure has been taken to establish such banks. The Himalayan country does not see the presence of such banks so far.

The central bank has received an application from a domestic company to establish the infrastructure development bank about four months ago. "After the introduction of licensing policy, we can start a formal procedure to provide license," Pandit said.

As per the licensing policy, the interested party should first take approval in principle from the central bank to establish such bank by submitting necessary documents.

After getting nod, the promoters should establish a public limited company at the Office of Company Registrar and prepare necessary physical infrastructures within six months.

(ASIA PACIFIC DAILY)