Nepal | June 03, 2020

Govt to set up Rs 100bn infra development bank under Chinese investment

Sujan Dhungana
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Kathmandu, July 20

The government has approved the proposal to form an infrastructure development bank under Chinese investment.

A Cabinet meeting recently agreed in principle to form such a mega bank under Chinese investment, which will have paid-up capital of Rs 100 billion, informed Rajan Khanal, secretary at the Ministry of Finance (MoF).

Following the Cabinet’s nod, MoF is currently holding bilateral discussions with China to set up the bank as soon as possible.

“Mega banks especially dedicated to infrastructure investment and development are necessary in Nepal to address the infrastructure deficit issues,” said Khanal, adding that the government will promote such banks with foreign investment in the country.

However, the Chinese-investment bank needs to have at least 20 per cent domestic share.

“As we will have Rs 20 billion responsibility in the planned infrastructure development bank under Chinese investment, we are currently discussing the possible modality of investment from Nepal’s side,” added Khanal.

As lack of infrastructure financing has been a major bottleneck for the country’s development process, establishment of such infrastructure-dedicated banks will assure necessary resources for mega-infrastructure projects.

In August last year, Nepal Rastra Bank (NRB) had brought ‘Licensing Policy for Infrastructure Development Bank 2017’ opening licence for Nepal Investment Development Bank (NIDB), which will have paid-up capital of Rs 20 billion.

As per the central bank’s mandate, different domestic promoters of NIDB have already deposited 45 per cent of the paid-up capital of the proposed bank.

Likewise, MoF officials informed that Indian investors have also expressed interest to set up an infrastructure development bank in Nepal.

Meanwhile, Finance Minister Yubaraj Khatiwada today said that the government’s top priority in the ongoing fiscal year will be to increase investment, especially in the infrastructure sector. He mentioned that government will be able to inject only one-third of the total necessary investment in the country’s infrastructure, with the rest needing to come from the private sector.

“Establishment of two mega banks to finance big infrastructure projects will assure the availability of resources for the infrastructure sector. It is only through investment in infrastructure that Nepal can achieve competitive development growth,” said Khatiwada.

According to him, the government will improve its mechanism to facilitate investments (both domestic and foreign) and partner with the private sector in the journey of growth.

Meanwhile, Khatiwada also informed that the government will make Investment Board Nepal (IBN) more active and ease investments and doing business environment in the country by reforming the  existing laws.


A version of this article appears in print on July 21, 2018 of The Himalayan Times.


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