KATHMANDU, Dec 7: Nepal Rastra Bank (NRB) has started the process of divesting its stake in Nepal Stock Exchange (Nepse).
The central bank holds 34.6 percent stake in the country's only bourse. The NRB recently wrote a letter to Nepse, seeking the stock exchange company's help in facilitating the share divestment process.
This move comes at a time when the government is preparing to restructure the stock exchange company.
While the government, which owns 58.66 percent stake in the Nepse, has been saying that it wants to restructure the stock exchange company through privatization, the process has not moved ahead. Currently, it is conducting a study to find an appropriate modality for privatization.
In its letter, the central bank has asked the Nepse to start the process of relinquishing its ownership. “The Financial Sector Development Strategy of the government has stated that the government's shares in Nepse will be divested to bring a strategic partner for the stock exchange company,” Bhisma Raj Dhungana, executive director at the Corporate Planning Department of the NRB, told Republica. “Since auctioning of shares by the NRB itself may not attract strategic partners, we have requested Nepse to start the process instead,” he added.
In the budget speech of the Fiscal Year 2010/11, the government had announced that the process of privatization of Nepse will be taken forward. Two years ago, the government commissioned a study team under SR Panday to provide suggestions on restructuring of Nepse amid calls for privatization of the stock exchange company. The consultant has reportedly advised the government to privatize Nepse to bring efficiency in the market. However, there has not been any real progress toward privatization of the stock exchange company. Government officials say that they have not received any interest from foreign institutions to work as strategic partner of Nepse.
The government, however, is reluctant to divest its shares in Nepse and privatize the stock exchange company, according to sources at the Nepse. “It would not have taken much time if the government was really willing to privatize or restructure the Nepse,” an official of Nepse told Republica. “The bureaucracy continues to drag its feet on the restructuring process. Even senior officials of the central bank do not want it to happen. Had they been serious, they would have started the divestment process themselves instead of writing to Nepse,” the official added.
As the privatization process has remained disappointingly slow, the Securities Board of Nepal (Sebon) recently decided, in principle, to add a new stock exchange company for promoting competition in the market.