Sunrise Bank joins the race of debenture issuance; Debenture worth Rs 1 arba to be floated

Sunrise Bank Limited has decided to issue debenture worth Rs1 arba. The tenure of the debenture will be five years. The annual interest rate has been quoted to be 10% by the bank. Sunrise bank has a CAR of 14.08 as of Asar. The debenture will be redemption as per its nature.Sunrise Bank further signed an agreement with Prabhu Capital Limited in order to float debenture.

The increase of capital directly impacts return on equity of any bank. On the contrary, with the issuance of debenture, banks can pay a fixed interest. Due to this flexibility of debentures, Nepalese commercial banks are more into issuance of debentures lately. Furthermore, Nepal Ratra Bank has facilitated to issue debenture for the hundred percent of the core capital. Previously, this proportion was only 50% of the core capital.

NIB Bank Limited, NIC Asia, Sanima Bank and Siddhartha Bank are also in the pipeline for the issuance of their debenture. Since the debenture and bond market in Nepal is not active, these financial instruments are not listed in NEPSE for trade purpose.