KATHMANDU, May 13: With a rapid growth in capital market, number of financial institutions dealing merchant banking services has sprung up remarkably over the past one-and-a-half decade.
“We have granted permissions to seven different financial institutions to provide merchant banking service during this fiscal and five more companies are in the pipeline,” said Surbir Paudel, chairman of Securities Board of Nepal (SEBON), the capital market regulatory body. The number was only 10 till the beginning of the last fiscal. [break]
Paudel said over 42 companies got permission to issue right shares and ordinary shares worth over Rs 12 billion during this year.
“Volume of shares -- both on supply and demand sides -- has increased significantly in the market with the growth of financial institutions in the country. So, we are in favor of growth of merchant banking service to deal with the expansion of capital market,” Paudel said while inaugurating Civil Capital Market Ltd (CCML), a merchant banking institution, at Soalteemode in Kathmandu.
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On the occasion, Paudel vented his ire at Finance Ministry officials for not cooperating with SEBON´s attempts to reform capital market.
“Development of capital market hasn´t grown as expected due to ignorance of government officials. I would say the biggest obstacle is officials of Finance Ministry, who are not cooperating with us,” said Paudel.
“Capacity of SEBON has to be increased ´ten-fold´ to deal with the growing capital market but we can do nothing without the cooperation of the Finance Ministry officials,” Paudel added.
He also said names of 20 subscribers out of 47 forms reported misplaced in Sunrise Bank´s Initial Public Offering, have been collected by Wednesday. “Investigation is going on if there are other irresponsible acts in handling IPO forms,” added he.
Shashin Joshi, president of Bankers´ Association, expressed dissatisfaction over growing practice of not fulfilling the commitment made in the prospectus by different companies while issuing public shares.
“Lack of sincerity on the part of issue managers and SEBON in this regard, prospectus issued by the companies have been limited only to formality,” said Joshi. Jhapat Bohara, president of Development Bank and Financial Institutions´ Association demanded the government to widen the authority of merchant banking institutions.
Ram Shanta Shrestha, president of Finance Companies´ Association, objected to the dominance of promoters even in public limited companies due to lack of monitoring by authorities concerned. Ichha Raj Tamang, president of Civil Capital Market Ltd (CCML), said the company was established keeping in view with the growing demand of merchant banking services in the country.
Bhisma Raj Chalise, director of the CCML, said the company was established with the investment Rs 49 million from promoters. He said Rs 21 million or 30 percent has been allocated for the investment from general public.
