The launch of new mutual fund schemes worth Rs 1.8 billion has hit a snag as the regulator is planning to impose credit rating of fund managers and sponsors.
Siddhartha Capital, NMB Capital and Laxmi Capital have been waiting for the regulator’s approval for their proposed schemes for more than six months. However, Securities Board of Nepal (Sebon) has yet to take a decision as it is planning to get a credit rating agency rate the mutual fund managers and sponsors.
“The Sebon board is contemplating on asking fund managers and fund sponsors to get rated for credit worthiness by a credit rating agency, so we have not yet granted approval to any scheme,” informed a highly placed official at Sebon.
“Approval cannot be granted until Sebon figures out whether regulations permit the regulator to direct the fund managers and sponsors to get rated,” said the official.
The regulator is currently studying the regulations and consulting experts regarding the matter. Sebon wants to ensure that fund managers and sponsors who handle almost half a billion rupees of public money are solvent and credible enough by getting them rated.
Siddhartha Capital — fund supervisor for Siddhartha Investment Growth Scheme I — had sought approval for another scheme worth Rs 800 million in May, 2013. NMB Capital had also submitted the prospectus of NMB Sulabh Investment Fund worth Rs 600 million more than six months ago. Laxmi Capital has also applied for approval for Laxmi Value Fund worth Rs 400 million.
All the three fund managers are merchant banking subsidiaries of class ‘A’ commercial banks and the respective banks have been designated as mutual fund sponsors.
Though Sebon is mulling credit rating of the fund managers and sponsors as is the international practice, none of the governing regulations has mentioned it. The Credit Rating Regulation 2068 and Mutual Fund Regulation 2067 do not have any provision of getting managers and sponsors of mutual funds rated.
“We have not yet been formally approached by Sebon regarding the matter,” said CEO of Siddhartha Capital Dhurba Timilsina. “If the law requires managers and sponsors of mutual funds to be rated then we will have to do so, however, till this day no such regulation has been introduced,” he added. According to the Credit Rating Regulation 2068, any company that is launching public offering, bonds, debentures or rights shares worth more than Rs 30 million has to get rated mandatorily. But it does not include mutual funds as instruments to be rated.
Moreover, Sebon had not raised the credit rating issue during the launch of the last two mutual fund schemes that are listed at the stock exchange right now. Siddhartha Growth Investment Fund I was issued in November 2012 — before Nepal’s only credit rating agency Icra Nepal started operations. Even Nabil Invest’s mutual fund scheme — Nabil Balanced Fund I — was launched in March 2013 after Icra Nepal had already started operations and the credit rating of issues higher than Rs 30 million was made mandatory.
source: the himalayan times,11 Jan 2014
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Siddhartha Capital, NMB Capital and Laxmi Capital have been waiting for the regulator’s approval for their proposed schemes for more than six months. However, Securities Board of Nepal (Sebon) has yet to take a decision as it is planning to get a credit rating agency rate the mutual fund managers and sponsors.
“The Sebon board is contemplating on asking fund managers and fund sponsors to get rated for credit worthiness by a credit rating agency, so we have not yet granted approval to any scheme,” informed a highly placed official at Sebon.
“Approval cannot be granted until Sebon figures out whether regulations permit the regulator to direct the fund managers and sponsors to get rated,” said the official.
The regulator is currently studying the regulations and consulting experts regarding the matter. Sebon wants to ensure that fund managers and sponsors who handle almost half a billion rupees of public money are solvent and credible enough by getting them rated.
Siddhartha Capital — fund supervisor for Siddhartha Investment Growth Scheme I — had sought approval for another scheme worth Rs 800 million in May, 2013. NMB Capital had also submitted the prospectus of NMB Sulabh Investment Fund worth Rs 600 million more than six months ago. Laxmi Capital has also applied for approval for Laxmi Value Fund worth Rs 400 million.
All the three fund managers are merchant banking subsidiaries of class ‘A’ commercial banks and the respective banks have been designated as mutual fund sponsors.
Though Sebon is mulling credit rating of the fund managers and sponsors as is the international practice, none of the governing regulations has mentioned it. The Credit Rating Regulation 2068 and Mutual Fund Regulation 2067 do not have any provision of getting managers and sponsors of mutual funds rated.
“We have not yet been formally approached by Sebon regarding the matter,” said CEO of Siddhartha Capital Dhurba Timilsina. “If the law requires managers and sponsors of mutual funds to be rated then we will have to do so, however, till this day no such regulation has been introduced,” he added. According to the Credit Rating Regulation 2068, any company that is launching public offering, bonds, debentures or rights shares worth more than Rs 30 million has to get rated mandatorily. But it does not include mutual funds as instruments to be rated.
Moreover, Sebon had not raised the credit rating issue during the launch of the last two mutual fund schemes that are listed at the stock exchange right now. Siddhartha Growth Investment Fund I was issued in November 2012 — before Nepal’s only credit rating agency Icra Nepal started operations. Even Nabil Invest’s mutual fund scheme — Nabil Balanced Fund I — was launched in March 2013 after Icra Nepal had already started operations and the credit rating of issues higher than Rs 30 million was made mandatory.
source: the himalayan times,11 Jan 2014
LINK
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