The Securities Board of Nepal (SEBON) has implemented the ‘Securities Issuance and Allotment (Sixth Amendment) Guideline, 2079 BS’ with the aim of allowing the Nepalis employed abroad to enter the stock market back home, by applying for IPOs. With the new Guideline in place, Nepalis who are employed abroad can easily invest in initial public offerings (IPOs).
Authorities believe the new arrangements will also encourage Nepalis working abroad to remit money back home through formal channels. At a time when the country’s foreign exchange reserves are depleting, it is estimated that remittances through the formal system will increase if reservation can be arranged in the IPO for the workers who have gone for foreign employment.
This arrangement was made by the government after it was realized that the remittances received were being used only for the purchase of consumer goods which are mostly imported. SEBON has made such an arrangement on the initiative of the Ministry of Finance with the aim that the money received from the remittance should be used in the productive sector and be used in building the country’s economy.
According to the new system, Nepali people who are working abroad can participate in the issuance of general shares (IPOs) in the share market in the country. Before the initial issue to the general public, any company or organization now must allocate 10 percent of the shares to be issued to the public for the Nepali people who are working abroad after obtaining labor approval from the relevant body of the Government of Nepal.
While applying for shares, payment must be made through the remittance account held at ASWA member banks and financial institutions. SEBON has made a provision that the share issue and sales manager should publish the invitation letter for a period of 15 days before the issue for the general public.
While applying for shares, the applicant has to deposit at least 50,000 Nepali rupees in the remittance savings account in the last six months. Nepali citizens who are employed abroad can open a beneficiary account by submitting customer identification details through electronic means while opening a beneficiary account. Banks and financial institutions will also have to provide the CRN number to such customers through electronic means.
According to the details of Nepal Rastra Bank (NRB), in the second month of the current financial year, Nepal received Rs 1.87 billion in remittances. The remittance inflow has increased by 19.8 percent. In the same period of the previous year, the remittance inflow had decreased by 5.8 percent.
The remittance inflow in US dollars increased by 11.3 percent and reached over 187 billion rupees. Last year, such flow decreased by 5.3 percent. During the review period, the number of Nepali people who took the final work permit (institutional and individual-new) for foreign employment increased by 170 percent to 103,898.
