Citizen Investment Trust and Nepali Insurance companies should invest in Venture Funds

The government needs to encourage and create an environment where pension funds, insurance companies are drawn into investing in alternative investment asset class (AIAC) like seed, venture capital, and private equity funds.  Institutional investments in AIAC will improve access to risk capital needs of startup and scaling-up companies; which will translates into more job creation in productive sectors and sustainable economic growth.  At present most of the heavy weight institutional investors like Citizen Investment Trust, Army Welfare Fund and insurance companies are routing their majority of their investments through banks rather than investing directly in a company or through private equity fund. Due to the lack of investment avenues like AIAC, institutional investors, particularly insurance companies are facing sever asset liability maturity mismatch. Exploring opportunities in AIAC in one hand will allow institutional investors to diversify their investment risk away from banking sector and on the other hand will easy the supply of risk capital to SME sector.

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Second, remittance is one of the major revenue sources of Nepali economy and it contributes to 25% of the GDP, which translates to about USD 3.5 billion. There is an immense opportunity to channel remittances to productive use in SME sector through financial innovation like securitization of future remittances inflow. Securitization is a financial process in which assets are pooled and securities representing interests in the pool are issued....................Need to go eat maybe will continue writing this blog later..