In banking and finance, risk weightage is a percentage assigned to assets or loans based on how risky they are. This percentage determines how much capital a bank needs to keep aside as a safety cushion in case of losses. Higher-risk assets get higher risk weightages, meaning more capital needs to be reserved for them. Lower-risk assets get lower risk weightages, requiring less capital. This calculation is vital for assessing a bank’s financial strength, known as the capital adequacy ratio.
Ankhukhola Hydropower Company Limited (AKJCL) has recently announced a change in its right share ratio from 200% to 150%. During a board of directors meeting held on Jestha 17, 2080, the decision was made to issue 150% right shares on the company’s paid-up capital of Rs. 80 Crores. This decision aligns with the instructions given by the regulatory body.
In a previous board meeting that took place on Baishakh 15, 2079, AKJCL had proposed to issue right shares in a ratio of 1:2. This move was intended to allow the company to invest a significant portion, at least 60%, of its shares in the Ganesh Himal Hydropower’s 20 M.W- Ankhu Khola-2 Hydropower project. However, the decision required approval from the Electricity Regulatory Commission. As a result, the company has now revised its right shares issuance, opting for a ratio of 150% from the paid-up capital of Rs. 80 Crores. This means that the paid-up capital will reach Rs. 120 Crores after the issuance of the aforementioned right shares.
It is important to note that the issuance of these right shares is subject to approval from the Securities Board of Nepal (SEBON) and will also need to be endorsed during the company’s upcoming Annual General Meeting (AGM).