“It is necessary to establish the fund by pooling investments from Citizen Investment Trust (CIT), Employee Provident Fund (EPF) and Rastriya Beema Sansthan (RBS) to inject at least Rs 5 billion into the capital market,” Babu Ram Shrestha, chairman of Sebon, said.[break]
Shrestha said they have suggested to the government to designate CIT as the agency responsible for handling the fund.
The stock market regulator has also recommended to the government to slap transaction tax in place of capital gains tax, which is levied on profit made through share transactions. It has also suggested to the government for exemption of dividend tax on mutual funds, which are expected to bring in institutional investment in the secondary market, through the upcoming budget.
“The government must encourage mutual funds by announcing exemption on capital gains tax and tax on dividend,” said Shrestha.
Investors have long been lobbying for tax exemption in mutual funds.
“We have suggested that the government levy transaction tax with the introduction of Central Depository System -- online-based share trading -- so that more companies from real sector are attracted toward stock market to raise their capital base,” Shrestha added.
He also said Sebon was soon holding a meeting with stakeholder to discuss on ways to provide incentives to the companies from real sector.
Sebon has suggested to the government to open another stock exchange from private sector investment to end monopoly of Nepal Stock Exchange (Nepse).
“If Nepse failed to improve its service quality even after starting online share transactions from mid-July, we will speed up the process to pave the way for another stock exchange,” added Shrestha.
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