Print Edition - 2017-11-23 | MONEY
Care Rating Nepal gets Sebon’s nod
Nov 23, 2017-
Care Rating Nepal Limited (CRNL) has received the go-ahead from the Securities Board of Nepal (Sebon) to operate as a credit rating agency. It is the second credit rating agency after ICRA Nepal to be approved by Sebon.
Credit rating agencies measure the financial strength of a company and its ability to repay loans. Potential investors rely on the rating and other information provided by credit rating agencies to make investment decisions. Nepal’s laws require any company planning to make an initial public offering (IPO) or issue rights shares worth more than Rs30 million to obtain a credit score. Sebon can also direct companies to get a credit score before issuing shares worth less than Rs30 million.
Companies need to get a credit score before issuing debentures and bonds, preference shares, ordinary shares at a premium and other instruments. They also need to get a credit score when making a further public issue.
Similarly, mutual funds and investment companies need
to get a credit score so that their potential clients can
find out about their business performance.
A credit score helps possible clients to decide whether or not to conduct transactions with a company. Companies and individuals with high ratings are trusted by banks and financial institutions while issuing loans. Similarly, insurance companies with a high credit score means they have a good history of making claim settlements on time.
Deputy spokesperson for Sebon Niranjaya Ghimire said the stock market regulator issued a permit to CRNL to operate as credit rating agency last Thursday. “The establishment of the new rating agency is expected to boost competition and help service seekers receive credit scores in a simplified manner,” Ghimire said. “By issuing a licence to the new rating agency, Sebon has aimed to promote competition and ensure that business entities seeking a credit score get quality service.” Established in 2012, the first credit rating agency ICRA Nepal provides rating and grading services to commercial organizations. A hopeful credit rating agency is required to have a paid-up capital of Rs20 million
and must have been established as a joint venture with a foreign agency.
According to Sebon, CRNL has a paid-up capital of Rs50 million and was registered with the Company Registrar’s Office on May 3. Credit Analysis and Research (CARE) of Mumbai, India has a 51 percent stake in CRNL.
Similarly, Vishal Group, Emerging Nepal, Nepal Re-Insurance Company, Global IME Bank, Prudential Insurance and Life Insurance Corporation, among others, are CRNL’s major shareholders. Meanwhile, Nepal Rating Agency is also in the process of receiving a licence to operate as credit rating agency. Anal Bhattarai, a joint venture partner of the company, said they were in the final stage of receiving a licence from Sebon.
Published: 23-11-2017 07:48