First credit rating agency gets approval

KATHMANDU, SEP 21: 

Nepal’s first credit rating agency — Icra Nepal — has received the final approval to start operations from

the regulator — Securities Board of Nepal (Sebon). 

“Meeting on Monday approved the company for operation, and only handing over the licence formally is yet to be done,” said director of Sebon Niraj Giri. 

The regulator had conducted the inspection of the infrastructure of the aspiring rating agency as the final stage of assessment for licence, in July. It had applied for the final licence about three months back after finalising its set up. Icra Nepal Ltd was granted the Letter of Intent to undertake the process to start a credit rating agency in Nepal by Sebon in August 2011. 

India’s Icra Ltd will have 55 per cent stake in Icra Nepal while remaining stake is held by Credit Information Bureau, Himalayan Infrastructure Fund, and a few Nepali banks. Credit Rating Agency Regulation 2068 states a foreign credit rating agency must have at least 25 per cent stake in a Nepali credit rating agency. 

The credit rating agencies rate credit worthiness and financial soundness of an entity — individual, company or country — based on their financial indicators. The credit ratings are supposed to be a simple, yet effective indicator aiding ordinary investors to understand the risks involved in the investment process. 

Regulation says companies planning to issue ordinary shares, bonds, debentures, or preference shares exceeding Rs 30 million in value have to get themselves rated by a rating agency.

Source: THT