The license has been granted as per the Credit Rating Regulation 2011, which allows only foreign rating agencies with a joint venture with a Nepali entity to operate in the country. [break]
Established in 1991, ICRA is a public limited company, having its shares listed on the Bombay Stock Exchange and the National Stock Exchange in India.
Sebon stated that ICRA Ltd is having 55 percent share in Nepali joint-venture in which Credit Information Center (CIC), Nepali Banks and Financial Institutions, Himalayan Infrastructure Fund and reputed Nepali business people are holding the remaining stake.
ICRA Ltd, the largest share holder of US-based Moody´s Investors Service, has been operating credit rating service in Indonesia and Sri Lanka while the firm has been providing technical support in the credit rating domain in Bangladesh.
Moody´s Investor Service is among the US´s biggest three credit rating agencies which also include Fitch Group and Standard & Poor´s (S&P) that recently downgraded the US´s credit rating.
Sebon officials have expressed confidence that transparency and credibility could be established in overall bank and financial sector with the commencement of credit rating agencies in the country.
"Mainly beneficiary will be the investors who can get exact financial status of the companies which are issuing public shares. Also, this is expected to make financial sector more transparent," Paristha Poudel, director of Sebon, told Republica.
The credit rating agencies also rank the credit worthiness of borrowers by using standardized rate scale.
According to him, foreign company having at least total capital of Rs 20 million can apply for operating credit rating services in Nepal.
Securities and Exchange Board of India (SEBI), India´s stock market regulator, has granted permission to ICRA to run its credit reating business in India.
The regulations have made it mandatory for the company launching public issue, rights issue, debenture issue, preference share issue, premium share issue, Further Public Issue to undergo rating by credit rating agency and make public the report of the rating agency along with the prospectus, financial statements and other information of the company so as to better inform about the company´s credit position to investors.
The credit rating agencies grade the company on the basis of overall financial status, performance and condition of good governance and publish the evaluation report in easy language so that ordinary investors can understand the exact position of the company.
The agencies also can conduct the grading of the individuals and firms willing to take credit from bank and financial institutions with the permission of central bank. Similarly, they also perform the rating of the insurance companies on the basis of their capacity to pay insurance claims by the customers.
The regulations have given permission to foreign credit rating company with share ownership of 25-75 percent under the joint-venture with Nepali firm.
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