December 5: Securities Board of Nepal (SEBON) is preparing to allow Employee Provident Fund, Citizens Investment Trust and life insurance companies to operate mutual fund.
SEBON currently allows only commercial banks to operate mutual fund. SEBON has to amend the Mutual Fund Regulation 2076 to allow other institutions to operate mutual fund.
In a new draft to amend the regulation, SEBON has proposed including EPF, CIT and life insurance companies as institutions which can operate mutual fund.
The board has already forwarded the draft to the Ministry of Finance for approval. It will grant permission to these institutions to operate mutual fund as soon as the ministry approves the proposal, said a source at SEBON.
The draft has proposed that life insurance companies can operate mutual fund by establishing a sister corporations. The paid-up capital of such companies should be at least Rs 200 million. Besides this, insurance companies can operate mutual fund as per the other existing rules, informed Niraj Giri, spokesperson of SEBON.
Likewise, EPF and CIT can also operate mutual fund by creating sister concerns.
Giri said SEBON made this proposal to further expand the capital market of Nepal.
“We realized the need of this provision to further expand the capital market of Nepal,” said Giri.
“This practice is prevalent in the international market as well,” he added.