Kathmandu, September 3
The Citizen Investment Trust (CIT) will be allowed to deposit funds in infrastructure development banks and invest in private equity and venture capital funds under a proposed amendment to the Citizen Investment Trust Act.
The Ministry of Finance has proposed amending the Citizen Investment Trust Act 1991 through a bill registered in Parliament. The proposed amendment would allow the CIT to invest in infrastructure development banks through fixed-term deposits.
The government had previously amended the Act through an ordinance. Although the ordinance has since become inactive, the government has moved ahead with the amendment process by registering a bill in Parliament.
The CIT has so far primarily invested in short-term fixed deposits. The proposed provision is expected to give the fund more flexibility in managing its investments.
Infrastructure development banks currently require a minimum deposit of Rs 10 million from individuals and Rs 50 million from institutions for deposits with a maturity of five years or more. Since such banks do not accept deposits with maturities of less than five years, the CIT had faced difficulties in placing funds with them.
The bill also proposes changes to the CIT’s capital structure. While the existing law requires a minimum paid-up capital of Rs 3 billion, the CIT’s paid-up capital currently stands at around Rs 6.48 billion.
The bill proposes setting the CIT’s paid-up capital at Rs 6.8 billion and increasing its authorised capital from Rs 8 billion to Rs 10 billion.
The government currently holds a 23.34 percent stake in the CIT, while the National Insurance Corporation owns 31.55 percent. Nepal Stock Exchange holds 10 percent, other banks and financial institutions hold 15.11 percent, and the general public owns 20 percent.
The proposed legislation would also give the CIT authority to increase or decrease its share capital as necessary.
In addition to changes to its capital structure, the bill seeks to expand the areas in which the CIT can invest. It specifically opens the way for investments in private equity and venture capital (PEVC).
The Cabinet had approved the Ministry of Finance’s proposal to present the bill to the Federal Parliament on September 3. The bill was registered in the House of Representatives on Thursday.
