Icra Nepal to start operations soon

KATHMANDU, OCt 4: 

Icra Nepal –– Nepal’s first credit rating agency –– is all set to start rating services within the next two weeks. The Securities Board of Nepal (Sebon) ––the capital market regulator of Nepal –– handed the licence to Icra Nepal today. 

“As we have obtained the licence, we will be able to start operations in the next two weeks,” said managing director of Icra Nepal Deepak Raj Kafle. The rating agency will use methodologies and parameters adopted by Indian credit rating agency, Icra India, to rate the credit worthiness of companies. 

The agency had applied for the final licence about three months back after completing its set-up. Icra Nepal was granted a Letter of Intent by Sebon to undertake the process to start a credit rating agency in August 2011. 

Icra India has a 51 per cent stake in the rating agency, while the remaining stake is held by Credit Information Bureau, Himalayan Infrastructure Fund, and a few Nepali banks. 

The Credit Rating Agency Regulation 2068 states that a Nepali credit rating agency must have a minimum of 25 per cent stake of a foreign credit rating agency.

“We have a technical service agreement with Icra India, which will help us in developing rating methodologies and processes, acquiring analytical software, research base and provide analytical training to our analysts,” said Kafle. 

Credit rating agencies rate the 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 understand the risks involved in the investing process.

According to the Credit Rating Agency Regulation 2068, companies that are 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.

“After Icra Nepal comes into operation, it will be mandatory for all companies that are planning to offer ordinary shares or debentures worth more than Rs 30 million to get themselves rated and to publish their respective results in their prospectus so that the general investors are aware and can take well-informed decisions,” said Sebon’s chairman Baburam Shrestha.

Source: THT