Sebon grants licence to more merchant banks

Securities Board of Nepal (Sebon) granted permission to three more financial institutions to work as the Merchant Banks whereas three others are in pipeline. Development Credit Bank Ltd (DCBL), Vibor Bank Ltd (VBL) and Nepal Housing and Merchant Finance Ltd (NHMFL) got the licence to work as Merchant Banks making it to a total of 11 financial institutions working as Merchant Banks. "With more companies floating their shares, number of Merchant Banks has also increased," said Dr Chiranjivi Nepal, chairman of the Sebon, the regulatory authority of the capital market.

The Merchant banks can work as Issue and sales Manager, Share Registrar, Underwriter and Portofolio Manager, according to the Merchant Banker Regulation-2064 that has come into effect from February 15 to help better manage capital market. The regulation has clearly defined — Issue Manager, Underwriter, Share Registrar and Portfolio Manager — four entities. They all have to get licences from the board before operating. "A company can also work as all the four," according to the regulation.

Issue Manager manages issues of shares, Underwriter underwrites shares that are not sold and buys unsold shares, Share Registrar keeps all the records of shareholders and helps register shares, while Portfolio Manager helps investors to manage their portfolio. They all have to get licence separately to operate as either one of the four, or all from the regulatory authority, the Sebon. In case, any company wants to operate as all the four, it must have a paid up capital of Rs 70 million. However, the paid up capital for Issuer Manager is Rs 30 million, Underwriter is Rs 40 million, Share Registrar is Rs 10 million and Portfolio Manager is Rs 10 million.

According to the regulation, Merchant Banks must disclose their annual report within the three months after the end of fiscal year to maintain transparency. They also have to submit their half-yearly report within the 60 days of half yearly closing to the Sebon.

"They are regulated by the board," said Nepal adding that earlier due to dual regulation of Nepal Rastra Bank (NRB) and the board, there had been some confusion. However, Issue managers have been in trouble regarding the allotment of Initial Public Offerings (IPOs) of some financial institutions recently. NIDC Capital Markets Ltd faced wrath from the investors during the allotment of Global Bank's shares. A week ago that NMB Bank had also faced the similar music during the allotment of Clean Energy Development Bank's shares.
Source:
THT