The MoU, which was signed by PK Chaudhary, vice-chairman and group CEO of ICRA, and Prithivi Pande, chairman of the fund, has formed a new joint venture (JV), majority stake in which is owned by the ICRA Limited. Other leading commercial banks and Credit Information Bureau (CBI) will also have stakes in the proposed credit rating agency which is expected to come into operation within the next six months.
According to information disseminated at the signing ceremony Monday, five commercial banks -- Nepal Investment Bank, Standard Chartered Bank, Himalayan Bank Limited, Nepal SBI Bank Limited and Everest Bank Limited -- Himalayan Infrastructure Fund and CBI will partner in forming the proposed agency. However, local equity holders that collectively represent a range of transparent and well-governed financial institutions of Nepal will hold equity not more than four percent to ensure impartiality in the proposed rating agency.
Along with creation of a JV, ICRA has also announced to set up a representative office in Nepal and has appointed Deepak Kafle, former chairman of Securities Board of Nepal, as the resident director to oversee its operation in Nepal.
Speaking at the program, HIF Chairman Prithivi Pande highlighted the importance of credit rating agency in Nepal and said that the general investing public should take note of the arrival of credit rating firms and should use the ratings and the rating rationales to make sound investment decisions.
Full disclosure, transparency and sound governance practices are the distinguishing factors that help separate good institutions from the bad one, Pande stressed and added that objective reports and research provided by credit rating agencies providing commentary on corporate practices and management help in self-regulation and contribute to economic stability.
ICRA´s Vice Chairman PK Chaudhary said the company is making its first equity investment outside India in Nepal and added that credit rating agency must be an integral part of reforms process that Nepal has been undertaking. The newly signed MOU is important not only because it gives ICRA an offshore presence because it also underscores the growing international acceptance of ICRA expertise in the field of credit rating, he added.
NIBL receives ´A´ rating
Nepal Investment Bank Limited (NIBL), the largest private sector bank in terms of deposits and lending, has received an Investment Grade credit rating with the rating of NP ´A´ meaning adequate quality. NIBL has become the first Nepali corporate entity to receive such a rating from renowned ICRA Limited.
"The rating reflects the stable and sound nature of NIBL´s credit quality even as we hold one of the largest balance sheets in the financial sector. We will now take necessary measures to further improve risk management capacity and work towards achieving an even higher rating in future assessments," Prithivi Pande, chairman and CEO of the bank, told the gathering.
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