Thursday 25th April 2024
Seems, there are good days ahead for Nepal’s infrastructure projects!
In its new decision on February 11, 2019, Nepal Rastra Bank (NRB) has issued an operating license to the country’s only infrastructure bank i.e., Nepal Infrastructure Bank (NIB).
As the country’s first bank under the public-private partnership initiative, NIB will focus on filling funding gaps of the country’s infrastructure projects.
As per the new decision, the financial institution will resume its operations from June 2019.
The Central Bank issued the operating license and has also created a separate directive for NIB functioning.
As per the rule, the institution will need to start operating within six months of issuing the license. Meanwhile, NIB CEO Anil Gyawali says they have already planned to start operating before the set date.
NRB has also relaxed norms for NIB, allowing the latter to issue loans up to 90 percent of its credit to core capital and domestic deposits ratio. Whereas, the limit for the commercial banks stands at 80 percent.
Under the new rules, NIB is also eligible to accept fixed deposits about NPR 10 million with a five-year maturity period.
“Other than collateral based financing, we will be offering credit to large projects via a public-private partnership model under which government agencies and the private sector will stand guarantee for the loans,” says Gyawali.
NIB will have an authorized capital of NPR 40 billion, paid-up capital of NPR 12 billion and the issued capital of NPR 20 billion.
The institution can cater to investment needs of national infrastructure projects, especially in the areas of agriculture, construction, transportation, tourism, Information Technology, Special Economic Zone (SEZ) and urban development.
“We also aim to invest in social and economic overheads such as opening new tracks, bridges, irrigation systems, water supplies and markets in rural areas,” Gyawali adds, as he informed about focus on high value-adding projects.
The infrastructure bank will have its important role in fund management for large infrastructure projects from both domestic and foreign sources.
Nepal is in dire need of capital for infrastructure to reach the targets set out by the Sustainable Development Goals by 2030.
As per the National Planning Commission estimates, Nepal is need of NPR 1,770 billion annual investment to meet the targets by UN Sustainable Development Goals (SDGs).
Towards this end, the government is also hosting the Nepal Investment Summit during March 29-30, 2019 to attract more foreign capital.
Hope, NIB will add to the government’s efforts to achieving a fast-paced infrastructure development in the country, in line with the global goals.
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