CIT Bill Proposes NRS 10 Billion Authorized Capital, Wider Investment Scope

The government has introduced a new bill to amend the Citizen Investment Trust Act, 2047, with the objective of modernizing the legal framework, expanding the operational scope of Citizen Investment Trust (CIT), and making Nepal’s capital market more dynamic and effective. Prepared by the Ministry of Finance, the proposed third amendment seeks to address practical challenges under the existing law while introducing provisions related to CIT’s capital structure, investment opportunities, governance and the authority of its board of directors. Under the proposed bill, CIT’s authorized capital would be increased to NRS 10 billion, divided into 100 million shares with a face value of NRS 100 each. The bill also formally recognizes CIT’s existing paid-up capital of around NRS 6.80 billion, which has increased through bonus shares and other means. The proposed legislation also updates the ownership structure by replacing the reference to the former Rastriya Beema Sansthan with Rastriya Jeevan Beema Company Limited and clarifies the participation of banks, financial institutions and insurance companies among CIT shareholders. It also aims to simplify procedures related to increases or reductions in capital, allowing the board to make necessary arrangements with prior approval from the Government and Ministry of Finance. The bill significantly broadens CIT’s potential investment areas. It would allow the fund to place deposits with infrastructure development banks recognized by Nepal Rastra Bank, while also enabling investment in units of mutual funds, private equity funds, venture capital funds and other innovative financial instruments registered with the Securities Board of Nepal. CIT would also be able to invest through partnerships or lending in nationally prioritized sectors including energy, transportation, tourism, information technology, agriculture, health and education. The bill further provides for investment in housing projects and loans or installment-based financing to participants for purchasing houses and land. To support capital market development, the proposed law includes provisions allowing CIT to operate portfolio management services and further organize its role in underwriting activities. The amendment also focuses on internal governance, accounting and leadership accountability. The Executive Director would serve a four-year term and could be reappointed once. The government would also have the authority to remove the Executive Director at any time if performance is deemed unsatisfactory. The bill recognizes the use of double-entry accounting and electronic systems for maintaining financial records. The government expects the proposed changes to improve CIT’s transparency, professionalism and operational efficiency without creating additional financial obligations for the state.