The proposed legislation addresses practical hurdles faced under the existing legal framework and introduces comprehensive updates to the fund's capital structure, investment horizons, and internal governance.
Capital Restructuring and Shareholder Clarifications
Under the newly drafted bill, the authorized capital of the fund will be raised to Rs 10 billion, structured into 100 million units at a rate of Rs 100 per share. Recognizing that the paid-up capital has already reached Rs 6.80 billion through prior bonus shares and other avenues, the bill officially sets a new ceiling for paid-up capital.
The legislation also updates ownership records, replacing Rastriya Beema Sansthan with National Life Insurance Company Limited, while explicitly defining the participation framework for banks, financial institutions, and insurance companies. Furthermore, it establishes a streamlined legal pathway for future capital expansions subject to prior approval from the government, the Council of Ministers, and the Ministry of Finance.
Broadened Investment Horizons
To foster a more dynamic capital market, the bill significantly expands the fund's investment channels:
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Allows fund deposits in fixed deposits of government- or Nepal Rastra Bank-recognized Infrastructure Development Banks.
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Permits investments in mutual funds, private equity funds, venture capital funds, and other innovative financial instruments registered with the Securities Board of Nepal (SEBON).
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Enables financing through partnerships or direct loan disbursements for national priority projects, including energy, transport, tourism, IT, agriculture, health, and education.
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Introduces provisions for installment-based or direct loans to participants investing in housing projects and real estate purchases.
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Streamlines portfolio management services and underwriting rules to actively support capital market development.
Governance and Accountability
The amendment places strong emphasis on internal governance, transparent accounting systems, and leadership accountability. The tenure of the Executive Director is set at a maximum of two four-year terms, with provisions allowing the government to remove leadership at any time for unsatisfactory performance. Additionally, the bill explicitly details the duties and powers of the Executive Director and modifies the structure of the Board of Directors.
Accounting standards have also been modernized to mandate a double-entry accounting system alongside the adoption of electronic record-keeping methods. Officials believe the legislative update will enhance transparency and professionalism within the fund without imposing any additional financial liabilities on the government.
