Governor asks private sector to form AMC

KATHMANDU, MAR 12: 

The central bank has asked banks and financial institutions to team up and form an Asset Management Company (AMC).

“The government has for a long time tried to form an Asset Management Company, but has not been successful,” said central bank governor Dr Yubaraj Khatiwada. “Banks and financial institutions should come forward and form an Asset Management Company as problems in the real estate sector have not yet been solved,” he said, adding that the government could be a partner in the private sector initiative.

An Asset Management Company is an organisation that invests its clients’ pooled fund into securities that match its declared financial objectives. 

It provides investors with more diversification and investment options than they would have themselves. Mutual funds, hedge funds and pension plans are all run by asset management companies. They earn their income by charging their clients with service fees.

An Asset Management Company offers its clients more diversification because they have a larger pool of resources than an individual investor. 

Pooling assets together and paying out proportional returns allows investors 

to avoid minimum investment requirements often required when purchasing securities on their own, as well as the ability to invest in a larger set of securities with a smaller investment.

Apart from the Asset Management Company, a credit rating agency will also help boost the current market, said Khatiwada, adding that a credit rating agency is in the pipeline and the formation of the Asset Management Company will help both the capital market and real estate grow. Both the sectors are passing through a difficult phase at present.

“But the real estate sector is picking up gradually, though it has its own internal problems that need to be solved for the sector to expand,” added Khatiwada.

Currently, developers have started more housing and apartment projects not only in the valley but outside too like in Hetauda and Pokhara, where there is still good demand according to the developers.

The government has also encouraged developers to go outside the valley as organised settlement is a must for the development of districts that have higher economic activities.

Source: THT