NMB Bank applies for mutual fund licence

KATHMANDU, JUN 30 -

NMB Bank Limited on Monday applied to the Securities Board of Nepal (Sebon) for the permission to run mutual fund.

With this, the number of banks and financial instructions (BFIs) applying for mutual fund license has reached two. Earlier, Siddhartha Bank had applied on June 9.

Following the introduction of the mutual fund regulation a few months ago, a number of banks, including Nabil, Kumari and DCBL, are preparing to establish subsidiary companies to operate mutual fund business.

In a press release, NMB said it has completed all preparations related to management and infrastructure. It will launch schemes in coordination with its subsidiary company NMB Mutual Fund, which works as its fund manager, after its registration. “We have to train our staff and prepare operational manual for its operation,” said NMB CEO Upendra Poudel. NMB Mutual Fund has a paid-up capital of Rs 70 million and the remaining Rs 30 million will be raised through initial public offering, according to Poudel.

According to the bank, the capital market would take a positive direction with the operation of mutual funds, as the funds will introduce small investors to the market. Mutual funds will operate as institutional investors.

Siddhartha bank will operate the mutual fund through its subsidiary Siddhartha Assets Management Company.

After Nepal Rastra Bank allowed BFIs to open asset management companies to operate mutual funds in the last week of March, BFIs have intensified their preparations. The central bank opened the door for establishing such companies through Article 47 of BAFIA that has provisioned that banks can venture into other businesses as determined by the central bank.

Another bank gearing up for mutual fund license is Nabil. It plans to apply to Sebon within the current fiscal year. “We have met all requirements related to infrastructure and paid-up capital and also appointed board members,” said Prabeen Ram Parajuli, head of Nabil Investment Banking. “We will apply to Sebon after the completion of the feasibility study which is in its final stages.”

Nabil will run the mutual fund through its subsidiary Nabil Investment Banking. It has a paid-up capital of Rs 100.5 million. The Mutual Fund regulation has provisioned that BFIs having Rs 1 billion paid-up capital cal only operate mutual fund. The subsidiary company working as fund manger should have a paid-up capital of Rs 100 million.

Establishment of mutual funds is expected to help stabilise the capital market as it is heavily distorted in the absence of big investors.

Posted on: 2011-06-30 08:47

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