Nepali bankers join hands with int'l institutions to set up an infrastructure dev bank

With the objective of spurring investment in infrastructure development in the country, a group of Nepali bankers signed a memorandum of understanding with bilateral and multilateral donors and international financial institutions.

At a special function held in the capital on Sunday evening, India's Infrastructure Development Finance Company (IDFC), along with the Asian Development Bank (ADB), DEG-KfW, and the International Finance Corporation (IFC) signed a Memorandum of Understanding with a private equity group in Nepal and a consortium of all the leading Nepalese banks and financial institutions to jointly incorporate an Infrastructure Development Bank in the country.

The ADB, DEG-KfW and IFC will now conduct a feasibility study that will determine the economic viability of such an institution. "After the report by the study, actual equity strategy, capitalisation and board and management structure of the bank will be finalised," said Radhes Pant, president of Nepal Bankers' Association who represents the consortium of Nepalese financial institutions.

"Continuing availability of infrastructure throughout Nepal is vital for economic growth. We have little choice but to invest prudently in infrastructure development," said Prithivi Bahadur Pande, Chairman and Chief Executive Director of Nepal Investment Bank Limited representing the Private Equity Group.

Finance Minister Dr. Ram Sharan Mahat said that private sector can finance in infrastructures like hydropower projects, toll ways, health and educational institutions. "On behalf of the government, I would like to assure you of full support," he said.

Acting governor of Nepal Rastra Bank (NRB), KB Manandhar, also promised support to the pioneering venture.

Rajiv B. Lal, Managing Director and Chief Executive Officer of IDFC of India, elaborated, "Coming from an institution that was founded with the same objectives and has successfully led many reforms in India, there is indeed much that the Infrastructure Development Bank will be able to achieve in Nepal." He further added that "IDFC is delighted to be working alongside Nepalese banks and financial investors to encourage private capital to help meet the Nepal's infrastructure demands."

The main objectives of the proposed Infrastructure Development Bank are to develop and provide a comprehensive range of financial products and services for the development of infrastructure projects and facilities in Nepal; engage with and support the government of Nepal on policies to facilitate private and public sector investment in infrastructure by sharing international best practices; manage and arrange debt and equity funds to promote infrastructure related projects; and provide advisory services to project developers and companies regarding technical, commercial, financial, legal, and environmental viability of infrastructure development projects in Nepal.

IDFC will be taking the lead in supporting the Nepalese Private Equity Group and the consortium of Nepalese financial institutions with the requisite managerial, technical, legal, and financial resources.

William Willms, Director, Capital Markets and Financial Sector Division, Asian Development Bank, said: "We are pleased to be able to partner with Nepal in this important initiative, as it seeks to remove a significant bottleneck to development. Establishment and support of a designated infrastructure finance institution will make a valuable contribution towards the longer-term objectives of sustainable economic growth and poverty reduction in Nepal."

"As a founder investor in Nepal's infrastructure development bank, we are committed to doing more in this country," said Turan Caglayan, Head of Asia Department of DEG KFW Bankengruppe.

"IFC is keen to deepen its engagement in Nepal to make a difference to its economy and promote sustainable development. By participating in this important initiative, there is potential for us to contribute significantly," explained Per Kjellerhaug, IFC Country Manager Nepal, Bhutan and Bangladesh.

The consortium of the Nepali banks and financial institutions involved in this venture include Bank of Kathmandu, Development Credit Bank Limited, Everest Bank Limited, Global Bank Limited, Machhapuchchhre Bank Limited, Nabil Bank Limited, Nepal Bank Limited, Nepal Investment Bank Limited, NIC Bank Limited, and Siddartha Bank Limited. nepalnews.com sd Sep 16 07