Government Drafting Law to Mobilize Alternative Finance for Infrastructure Development
Kathmandu – The Government of Nepal has begun drafting a bill to regulate alternative finance mobilization, aiming to diversify investment sources and support large-scale infrastructure projects. The Ministry of Finance is preparing the “Bill to Make Provisions Regarding Alternative Finance Mobilization, 2081,” which proposes an authorized capital of Rs 50 billion and a paid-up capital of Rs 10 billion for the fund.
The bill outlines that entities such as insurance companies, international financial institutions, the Employees Provident Fund, the Citizens Investment Trust, Social Security Fund, and foreign banks will be eligible to invest in the fund. Its primary objective is to channel alternative financial resources into essential projects that foster economic growth, employment, and sustainable development.
The government has emphasized the importance of alternative finance in the current fiscal year’s budget, highlighting methods like blending commercial, private, and non-governmental funds with concessional loans. The proposed fund will support critical projects, including electricity generation and distribution, roads, railways, airports, industrial parks, and urban infrastructure development.
The draft law also introduces innovative financing mechanisms, such as equity crowdfunding, project-specific loans backed by guarantees, and remittance funds collected from Nepali citizens living abroad. Additionally, it includes provisions for setting up guarantee funds for loans or bonds and project-specific funds through asset monetization.
However, the bill specifies several restrictions on investments. It excludes projects with estimated costs below Rs 1 billion, those unable to provide collateral for loans or guarantees, and projects with no immediate returns. Furthermore, it bars investments in projects led by individuals or entities connected to the fund’s stakeholders within the past three years.
The Ministry of Finance has stated that discussions with stakeholders are ongoing, and the draft is yet to be finalized.