Modality being finalised for CRAs
KATHMANDU, May 14:
The capital market regulator is planning to revise fee structure and area of operation for the Credit Rating Agencies (CRAs) in the final draft of the proposed regulation that will govern these agencies.
According to the initial draft prepared by Securities Board of Nepal (Sebon), It has set the limit on rating fee ranging from minimum of Rs 300,000 and maximum of 0.10 per cent of the total offering. Of which Sebon has to be paid five per cent of the total fee earned by the agencies on an annual basis.
As per the initial draft of the regulation, it will make the credit rating mandatory for the companies that plan to tap publi fund by offering shares to the public.
“During our discussions with the stakeholders, they have raised objection to the fee structure. In the final regulation, the fee structure will be revised,” said director of Sebon Niraj Giri.
“Also, the stakeholders have suggested expanding the area of operation for the agencies, allowing them to conduct consultancy as well so that even in case the rating business does not do well, they can survive,” he said, adding that the final regulation that will be taken to board of the regulator to be endorsed will be similar to the initial draft except for a few changes.
Any company that plans to issue corporate debentures and preferential shares also needs to get itself rated by a credit rating agency, according to the draft prepared by the capital market regulator of Nepal.
It is also mandatory for the company that is issuing bonus and right shares exceeding Rs 100 million in value to get themselves rated. The draft has provisions for any individual borrower that need to borrow more than Rs 100 million from banks and financial institutions to get their credit rating done.
The regulation has also opened up partnerships with foreign credit rating agencies. A foreign credit rating agency can own 25 per cent to 75 per cent equity in the credit rating agency.
Based on the financial indicators of a company or an individual, the rating agencies rate their credit worthiness and financial soundness. The ratings help layman investors to decide for themselves whether or not to be involved with that particular company, along with helping banks and financial institutions in taking a decision regarding lending to the company.
Source: THT
The capital market regulator is planning to revise fee structure and area of operation for the Credit Rating Agencies (CRAs) in the final draft of the proposed regulation that will govern these agencies.
According to the initial draft prepared by Securities Board of Nepal (Sebon), It has set the limit on rating fee ranging from minimum of Rs 300,000 and maximum of 0.10 per cent of the total offering. Of which Sebon has to be paid five per cent of the total fee earned by the agencies on an annual basis.
As per the initial draft of the regulation, it will make the credit rating mandatory for the companies that plan to tap publi fund by offering shares to the public.
“During our discussions with the stakeholders, they have raised objection to the fee structure. In the final regulation, the fee structure will be revised,” said director of Sebon Niraj Giri.
“Also, the stakeholders have suggested expanding the area of operation for the agencies, allowing them to conduct consultancy as well so that even in case the rating business does not do well, they can survive,” he said, adding that the final regulation that will be taken to board of the regulator to be endorsed will be similar to the initial draft except for a few changes.
Any company that plans to issue corporate debentures and preferential shares also needs to get itself rated by a credit rating agency, according to the draft prepared by the capital market regulator of Nepal.
It is also mandatory for the company that is issuing bonus and right shares exceeding Rs 100 million in value to get themselves rated. The draft has provisions for any individual borrower that need to borrow more than Rs 100 million from banks and financial institutions to get their credit rating done.
The regulation has also opened up partnerships with foreign credit rating agencies. A foreign credit rating agency can own 25 per cent to 75 per cent equity in the credit rating agency.
Based on the financial indicators of a company or an individual, the rating agencies rate their credit worthiness and financial soundness. The ratings help layman investors to decide for themselves whether or not to be involved with that particular company, along with helping banks and financial institutions in taking a decision regarding lending to the company.
Source: THT
