CIT not yet ready to work as market maker

KATHMANDU, JULY 12: 

Citizen Investment Trust (CIT) is still not ready to start operating as a market maker in the secondary market any time soon, despite plans to expand its presence in the stock market.

“We are still in the midst of preparing the guidelines to specify the mode of entry and exit in the share market so that CIT can effectively play the role of a market maker,” said managing director of CIT Rishi Raj Gautam during its annual general meeting that was held today.

The Finance Ministry, in February, had directed CIT to prepare a mechanism to start operations as a market maker to absorb excess shares and release the shares when there is shortage of supply to balance the share market.

However, CIT has still not prepared the guidelines. It is looking forward to diversifying the investment portfolio that at present mostly includes fixed deposits at financial institutions. “Recent experience has shown that fixed deposits are also risky instruments, so CIT will reduce fixed deposits to 40 per cent of the total investment and will try to invest in the diverse productive sector –– especially energy,” said chairman of CIT Dr Chandra Mani Adhikary.

The institutional depositor has about Rs 15.5 billion invested at financial institutions as fixed 

deposits which covers 65 per cent of its total investment. Its investment in shares of various companies amount to Rs 600 million which is 8.25 per cent of the total investment. Likewise, its investment in government securities covers nine per cent amounting to Rs 2.1 billion, by the end of the last fiscal year.

CIT, which was established in 1992, conducts collective investment schemes for the general public. This is one of the closest investment schemes that 

operates as mutual funds in the country’s capital market. It carries out unit trust schemes such as pension funds, gratuity funds, saving funds, insurance funds and so on. The funds thus collected are mobilised in different investment activities.

By the end of last fiscal year, Citizen Investment Trust had collected deposits exceeding Rs 25 billion through various schemes which is 27 per cent more than that of previous years. CIT has decided to distribute 35 per cent bonus shares from its profits earned in the last fiscal year.

‘Stop NOC loans’

In the 17th annual general meeting of Citizen Investment Trust (CIT), shareholders expressed apprehension about its continuous lending to Nepal Oil Corporation (NOC). Most shareholders pointed out the imprudence of consistently lending to such a financially sick firm without any collateral. NOC owes CIT Rs 5 billion, which it had borrowed to pay for fuel imports. “CIT has investments of general public, so government can’t keep asking CIT for money whenever it falls short of funds.”.

Source: THT