ICRA to set up Nepal's first rating agency

India credit rating agency, ICRA, has obtained licence for starting credit first rating agency in Nepal.

ICRA will set up the company along with domestic banks, insurance and other companies as local partners. The Indian rating agency would hold about 51% stake in the company, said P  K Choudhury , Vice-Chairman of ICRA and CEO of the ICRA Group.

In 2011, the The Securities Board of Nepal (Sebon) had initiated a number of reforms in the capital market, It had announced 27 new programmes for  fiscal year 2011-12  to deal with the capital markets. Among the reforms, were plans to introduce a central depository system (CDS), credit rating and companies that work as depositories of mutual funds. The Nepal Stock Exchange too had established a company CDS and Clearing Limited to operate the central depository system in the country. Sebon is also planning to bring in reforms in the commodity markets in Nepal also.

The Credit Rating Agency Regulation  in Nepal states that companies planning to issue ordinary shares, bonds, debentures, and preference shares exceeding Rs 30 million in value have to be rated by a rating agency. The rating agencies also have to continue rating a company for the next two consecutive years once it has rated the concerned company.

There are about 100-150 companies, mostly banks and insurance companies, which can be rated in Nepal, said Choudhury .

Already, ICRA is present in two Asian countries, namely, Sri Lanka and Indonesia. This apart, the company, is also working on a collaborative project with Bangladesh.

ICRA Nepal, is expected to rate firms issuing shares and bonds in the initial phase, apart from mutual funds and other investment instruments in the future.

ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial and investment institutions, commercial banks and financial services companies as an independent and professionals, among other. ICRA and its subsidiaries together form the ICRA Group of Companies, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange.