Nepal Rastra Bank issues license to usher future prospects of Infrastructure Development Bank in the country.

The central bank ( NRB) has issued license for the establishment of Infrastructure Development Bank , which is required to maintain at least Rs 20 Billion ( arba) as their initial paid-up capital . Certainly, this far-fetched government vision would revamp the prevailing economy and bring positive impact on the stock market as well by stimulating huge capital-intensive projects and joint-venture projects in the upcoming years but let’s not breathe a sigh of relief yet. In doing so, the central bank has invited the interested industrial and corporate investors nationally and internationally to apply for a letter of interest and start its operations upon fulfilling the stated conditions and requirements eventually. The central bank has promulgated this new provision under the recently amended Banking and financial Institution Act 2017 ( BAFIA ) which also entails that such infrastructure bank must be registered under the initials ‘Public limited company’ to ensure their trust on the public. Regarding its capital requirement, in case the bank is to be established under shared ownership of foreign joint-venture investment, then , it is imperative on their part to invest at least from the minimum range of 20 percent to maximum 85 percent of its paid-up capital ( 40 crore - 1 arab 70 crore) depending on their feasibility. Also provided that, the rest of 15 percent should be owned by the national public. Under these criteria, only foreign bank and financial institutions are permitted to be the shareholders. Alternatively , in another case , where and if the bank is to established independently under domestic investments , then, it is essential for the promoter stakeholders to back-up at least 51 percent of its initial paid-up capital ( 1 arba 20 crore ) . Provided that , the remaining 30 percent should float to the public ownership. However , the looming obstacle for national promoters is that , no amount of investment should be poured in through any bank borrowings or financial debt. In other words, NRB has restricted stringently against any capital investment financed through bank loans. But , the good news is that any interested Non-resident Nepalis ( NRNs ) seeking for long-term investment returns could start harvesting their dollars through remittance. Furthermore , these infrastructure bank would facilitate to perform special and specialized functions concerning industrial constructions , road constructions , mega commercial constructions which would demand larger capital and technological resources that could be done by mobilizing the long-term deposits , transfership of managerial skills and making equity investment.