Kathmandu. The government has proposed the creation of an Alternative Development Finance Fund to utilize the funds collected from the general public as insurance premiums and capital. According to the bill proposed by the Ministry of Finance, the fund will include contributions from the Social Security Fund, Citizens Investment Fund and Employees Provident Fund in addition to insurance companies.
The bill proposed in the Council of Ministers proposes that the initial size of the fund will be Rs 100 billion. Initially, 250 million units of promoter shares will be issued among the promoters for a paid-up capital of Rs 25 billion.
The insurance sector (life, non-life and reinsurance) will own a total of 24 percent of the shares in the fund, which will have a 51 percent shareholding of the Government of Nepal. The share of Employees Provident Fund, Citizens Investment Fund and Social Security Fund will be 25 percent.
If an international government or intergovernmental financial institution wishes to purchase the shares of the fund, the shares of the fund can be sold as per the decision of the Government of Nepal and the Council of Ministers on the recommendation of the committee. The collected capital of the fund and the amount of interest and investment returns will be invested in bonds, equity or mixed financial instruments.
Alternative development finance will be mobilized in 11 priority sectors including energy, electricity, infrastructure, industrial parks, dry ports, information technology, tourism, urban infrastructure construction, establishment and operation of public digital infrastructure. Investment will be made only in projects with an estimated cost of at least one billion rupees. The bonds issued by the Fund will be listed and traded on the stock market.
The Fund is authorized to act as a financial intermediary agency if a corporate entity or project requests funds to implement any infrastructure project. The Fund can monitor the project for which the loan or guarantee is provided or take necessary action for the implementation of the project.
The Fund will have a seven-member Board of Directors. It will be headed by the Finance Minister or Secretary. There will be six members from the promoter investors. There will be a Chief Executive Officer (CEO) to operate the Fund.
