KATHMANDU, June 9: The capital market regulator Securities Board of Nepal (Sebon) is preparing to issue an operating license to ICRA-Nepal within a week to work as a credit rating agency in the country.
“We are planning to issue the license to ICRA-Nepal, a subsidiary of ICRA-India Ltd after studying the application. Investors, lending institutions and share issuing companies will be benefited with the opening of the agency,” said Babu Ram Shrestha, chairman of Sebon on Saturday.
Once the agency comes into operation, a public company will have to undergo credit rating before floating public shares.
Managing director of ICRA-Nepal, Deepak Kafle said the company would commence its work as the first credit rating firm in Nepal within one month after it gets permission from Sebon.
ICRA-India Ltd has 51 percent stake in its subsidiary in Nepal, which has a paid up capital of Rs 20 million.
According to Kafle, Credit Information Center, local banks and individuals would invest in the remaining 49 percent shares in the firm.
ICRA has already acquired permission from the Nepal Rastra Bank, the central bank, to operate in Nepal.
Sebon by formulating necessary legal provisions a few months ago had paved the way for the credit rating firm to operate in Nepal.
Credit rating companies determine the rating of concerned companies, shares, bond and debenture which facilitate the investors to get the idea of exact credibility of the companies.
Rating of the companies will be ascertained on the basis of financial position, board of directors and nature of work of the companies.
As per the existing provision, a foreign parent company can have between 25-75 percent shares in a subsidiary in Nepal