Second Credit Rating Company ‘CARE Ratings Nepal’ Registered

May 5: ‘CARE Ratings Nepal’ has been registered at the Company Registrar’s Office on May 3 as the second credit rating company of Nepal.

The objective of the company is to maintain rating and grading of companies and commercial organizations by analyzing them besides research, training and disseminating of information.

The CARE Ratings Nepal has been established with an agreement with the Security Board of Nepal (SEBON) and in cooperation with the Credit Analysis and Research Ltd. (CARE), Mumbai, India.

Currently, ICRA Nepal established in 2012 is providing rating and grading services to commercial organizations. According to Dr Binod Atreya, CEO of Care Nepal, the company is in the process of operating soon. “We are submitting the papers required by SEBON”, he said.

Though the agreement was signed on October/November 2016, Dr. Atreya said that it took five months to take permission from SEBON and share market regularization body of India as well as the central bank.

There is a provision that to operate a rating company in Nepal, the foreign partner should have 51 percent share ownership. As per the provision, CARE, Mumbai, India has 51 percent of share investments in CARE Nepal while seven companies including Emerging Nepal Ltd and Vishal Group are other companies investing in CARE Ratings Nepal.

Niranjaya Ghimire, Assistant Spokesperson of SEBON, said the Board provided the license to the company as per the Credit Rating Regulations- 2068 BS. “The Board believes this will create competition in credit-rating business and the service will be more qualitative and easy,” he said.

It has been informed that CARE Ratings Nepal will start its work through rating of stocks and bonds. Nepal has lagged behind in this sector as compared to other countries.

 Although it started in 1987 in India, it has been just four to five years that Nepal started the credit rating. Stakeholders opine that there is a lot of potential on credit rating in Nepal as there are many companies such as banking and financial institutions (BFIs), insurance companies and public companies. Likewise, Atreya said that the financial structure and its market have created possibilities in this sector. 

What is Credit Rating?

The detailed analysis of financial status, situation of risk and capacity of providing profit is credit rating. According to SEBON, credit rating is compulsory for any organizations that are issuing primary shares of more than Rs 30 million.  The Nepal Rastra Bank (NRB) has said it would make arrangements for rating of debtors.