chhatramani/Nepal-Legal-Text-Corpus-44laws huggingface dataset:
Bank and Financial Institution Act 2073

Chapter- 4 Provisions on Board of Directors and Chief Executive

Section 24: Details of Directors to be collected
A bank or financial institution shall collect the following details of a Director:-
(a) Name, surname, address, academic qualifications, profession and experience of the Director,
(b) Details as to designation and responsibility if he/she has worked earlier as Director, official or employee of any other agency,
(c) Details as to name and address of family of the Director and relevant person’s details and financial interests of himself/herself or his/her family in bank or financial institution or other agencies, share ownership in his/her name and names of the family of said institution,
(d) Details of the shares and debentures subscribed by the Director or his/her family members in the bank or financial institution or its holding or subsidiary company,
(e) Details of the family members working as officials or employees in the concerned bank or financial institution, if any,
(f) Details as to whether the concerned bank or financial institution has, or is going to have, any type of agreement with himself/herself or his/her family member,
(g) Details as to whether any type of interests or concerns with regard to the appointment of Chief Executive, Company Secretary and Auditor,
(h) Written authority given to the Rastra Bank to allow it to conduct an inquiry or to cause to be conducted the inquiry as to the financial and professional background of the Director,
(i) Self-declaration that he/she is qualified to be the Director pursuant to this Act,
(j) Any other details as specified by Rastra Bank from time to time to be furnished before the Rastra Bank and the Board of Directors.

Bank and Financial Institution Act 2073

Chapter- 4 Provisions on Board of Directors and Chief Executive

Section 25: Information of Director and Record
1) A Director shall have to submit the details referred to in sub-section (1) of Section 24 to the bank or financial institution within seven days of his/her appointment.
2) The bank or financial institution shall have to separately maintain records of the details submitted pursuant to sub-section (1).
3) In case a Director or any member of his/her family acquires any substantial ownership or any type of interest in the bank or financial institution directly or indirectly, such Director shall have to present full details thereof at the first meeting of the Board of Directors.
4) The Director shall, while conducting discussions on any subject related to any interests in the Board of Directors or in any other sub-committee, have to inform about such interests at the beginning of the meeting and he/she shall not take part in the discussions or voting on such subjects.
5) In case there is a change in the details as referred to in sub-section (2) or Director has been changed, information thereof has to be submitted to the Rastra Bank within 15 days.
6) The Rastra Bank, if it deems it appropriate to conduct an inquiry on the information forwarded pursuant to sub-section (5), shall have powers to conduct or cause to be conducted inquiry on it.
Bank and Financial Institution Act 2073

Chapter- 4 Provisions on Board of Directors and Chief Executive

Section 26: Sub-Committees may be formed
1) Except otherwise expressly provided for in this Act that particular work shall be carried out by any specific agency or official, the Board of Directors may form one or more sub-committee/s for any particular purpose subject to the directives of the Rastra Bank.
Provided that the Chairperson of the Board of Directors shall not be allowed to remain in the sub-committee.
2) The functions, duties, powers and rules of procedure of the sub-committee formed pursuant to sub-section (1) and the remuneration or allowances receivable by the member for attending its meetings shall be as prescribed by the Board of Directors and such functions carried out by such sub-committee and expenditures incurred thereof shall be clearly mentioned in the annual report.

Bank and Financial Institution Act 2073

Chapter- 4 Provisions on Board of Directors and Chief Executive

Section 27: Delegation of Power
The Board of Directors may, having stated the rational and reasons, delegate any of its powers to any Director, a sub-committee formed pursuant to Section 26, the Chief Executive or any person acting as the Chief Executive of the bank or financial institution on the condition that such powers shall be exercised under its supervision or direction.

Bank and Financial Institution Act 2073

Chapter- 4 Provisions on Board of Directors and Chief Executive

Section 28: Allowances and Facilities of the Director
Meeting allowances and other facilities to be entitled to a Director for being present in the meeting shall be as provided for in the Articles of Association.
Bank and Financial Institution Act 2073

Chapter- 4 Provisions on Board of Directors and Chief Executive

Section 30: Functions, Duties and Powers of the Chief Executive
1) The functions, duties and powers of the Chief Executive shall be as follows:-
(a) To exercise the powers delegated by the Board of Directors and to implement decisions of the Board of Directors subject to the Memorandum of Association and Articles of Association and oversee and control the activities and transactions of the bank or financial institution,
(b) To prepare the annual budget and action plan of the bank or financial institution and submit it before the Board of Directors for approval,
(c) To manage necessary human resources subject to the Personnel Byelaws of the bank or financial institution,
(d) To implement or cause to be implemented the decisions of the General Meeting,
(e) To operate the institution according to this Act and directives of the Rastra Bank and to have an effective internal control system and risk management,
(f) To submit statements, documents, decisions, etc. to be submitted by the bank or financial institution to the Rastra Bank or any other agency on time subject to this Act, directives of the Rastra Bank and Memorandum of Association and Articles of Association,
(g) To operate the institution with optimum protection of the interests of depositors, shareholders and the institution itself,
(h) To apply appropriate norms for senior management subject to the policy as determined by the Board of Directors.
2) The Chief Executive shall be accountable to the Board of Directors for their work.

Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 31: Prohibition on carrying on Financial Transactions by anyone other than Bank or  Financial Institution
1) No one, except the bank or financial institution having obtained a license pursuant to Section 34, shall carry on banking or financial transactions according to this Act.
2) The Rastra Bank shall formulate and execute a licensing policy concerning the bank or financial institution for the purpose of granting a license to the bank or financial institution.
Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 32: Use of Name of Bank or Financial Institution
1) No one shall use the name of a bank or financial institution for the purpose of carrying on banking and financial transactions without obtaining approval from the Rastra Bank.
2) Any person, company, or institution shall not be entitled to use in its name words such as “bank”, “banking”, “finance”, “financial”, or other words or symbols or adjectives indicating a similar meaning without getting prior approval from the Rastra Bank, except the bank or financial institution having obtained license to carry on banking and financial transaction pursuant to Section 49 of this Act and a foreign bank or financial institution opening a branch office in Nepal.
3) Notwithstanding anything contained in sub-section (2), the provision as referred to in sub-section (2) shall not be applicable in the case of the following organisation:-
(a) Any organisation established or recognised according to law or international agreement or practice,
(b) The company submitting an application for carrying on banking and financial transactions within six months of incorporation.
4) Notwithstanding anything contained in sub-section (2), any bank or financial institution having obtained approval to carry on financial transactions according to the prevailing laws during the commencement of this Act may carry on financial transactions by using the name prevailing at the time of approval.
5) Financial institution of Class “B”, “C” and “D” shall use the name as “development bank”, “finance company” and “micro finance financial institution” respectively.
6) The bank or financial institution having used the name of micro-finance development bank before the commencement of this Act shall use the name as referred to in Sub-section (5) after the commencement of this Act
Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 34: License may be granted for carrying out Banking and Financial Transactions
1) In case the Rastra Bank finds, while carrying out an inquiry on the application submitted pursuant to Section 33 and documents and details enclosed therewith, that all requirements to carry on the banking and financial transaction under this Act are met, the Rastra Bank may issue a license of any class based on the classification of bank or financial institution pursuant to Section 37 within one hundred twenty days to operate banking and financial transaction.
2) Before issuing a license pursuant to sub-section (1), the Rastra Bank shall ascertain the following matters:-
(a) Granting of license for the operation of a bank or financial institution will result in the development of healthy competition and effective financial intermediary transactions, and it will result in the protection of the interests of depositors,
(b) It is capable of carrying on banking and financial transactions subject to this Act, Rules, Byelaws framed thereunder, Orders or Directives as well as Memorandum of Association and Articles of Association,
(c) The documents and details submitted along with the application pursuant to Section 33 for a license are sufficient, and physical infrastructures are adequate,
(d) Any official appointed or included or to be appointed or to be included in the bank or financial institution is capable of carrying out banking and financial transactions.
3) In case the Rastra Bank has specified the date of enforcement of the license while issuing a license to carry on banking and financial transactions, the license shall be deemed to have been activated from that specified date, and if no such date has been specified, the license shall be deemed to have been activated from the date of issuance of the license

Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 35: Issuance of License may be denied
1) Notwithstanding anything contained in Section 34, the Rastra Bank may deny issuing a license to operate banking and financial transactions to a bank or financial institution in any of the following circumstances:-
(a) If it causes adverse effects on the stability, fair competition and credibility of the financial system of Nepal,
(b) If it is not reasonable and appropriate to issue a license for the operation of financial transactions for the protection of the interests of depositors,
(c) If the infrastructure to operate banking and financial transactions are not completed,
(d) If other particulars or conditions pursuant to this Act are not found to be completed.
2) The Rastra Bank shall, in case there is a situation that the license to operate banking and financial transactions cannot be issued according to this Section, inform the concerned bank or financial institution stating the reasons thereof within ninety days of the date of filing of the application.
Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 36: Rastra Bank may Specify Conditions
1) The Rastra Bank may, while granting a license for carrying on banking and financial transactions pursuant to Section 34, specify necessary terms and conditions by giving consideration to the existing position of the bank or financial institution, healthy operation of financial transactions and interests of depositors. It shall be the duty of the concerned bank or financial institution to abide by such terms and conditions.
2) The Rastra Bank may bring necessary alterations and changes from time to time as per the requirement in the terms and conditions as specified pursuant to sub-section (1).

Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 37: Classification of Bank or Financial Institution
The Rastra Bank shall, based on the minimum paid-up capital of the bank or financial institution submitting application pursuant to Section 33 for carrying on banking and financial transactions and transactions to be operated on by such bank or financial institution and working areas, classify banks or financial institutions in classes “A”, “B”, “C” and “D” and issue license to concerned banks or financial institutions accordingly.
Provided that an infrastructure development bank shall not be classified in any class.
Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 38: May be Converted into Higher Class of Bank or Financial Institution
1) If a bank or financial institution of the lower class desires to be converted into a bank or financial institution of one level higher class, it has to submit an application to the Rastra
Bank.
Provided that the class “D” institutions may not be converted into the higher class.
2) If the Rastra Bank deems it appropriate, upon carrying out an inquiry into the application and details enclosed with the application according to sub-section (1), to convert the bank or financial institution as the bank or financial institution of higher class, it may grant prior approval subject to the following terms and conditions:-
(a) If it has met the paid-up capital requirement for a bank or financial institution of higher class as prescribed by the Rastra Bank,
(b) If it has continuously maintained the capital fund adequacy according to the Rastra Bank directives for the last five years, it has been in profit continuously for the last five years, and the average non-performing loans of the last five years have been within the limits as prescribed by the Rastra Bank,
(c) If preliminary expenses have already been written off,
(d) If the shares to be issued publicly have been issued and already been allotted,
(e) If the General Meeting has already passed the special resolution for conversion into the upper class of the bank or financial institution,
(f) If it has met all conditions as prescribed by the Rastra Bank.
3) The Rastra Bank shall issue the license of upper-class bank or financial institution pursuant to this Act, causing amendment to be made to the Memorandum of Association and Articles of Association of the bank or financial institution according to prevailing law having obtained prior approval pursuant to sub-section (2).

Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 39: List to be Published
1) The Rastra Bank shall publish a list of the bank or financial institutions carrying on banking and financial transactions every month in a national-level newspaper or through any other means.
2) The Rastra Bank may include the date of commencement of the transaction, paid-up capital, the position of the capital fund, total loans, the status of non-performing loans and other details as deemed necessary by the Rastra Bank in the list to be published pursuant to sub-section (1).
Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 39A: Provisions as to the operation of financial institutions in the Province
1
1) The Nepal Rastra Bank will be able to operate as a financial institution limited to the province level subject to the limits, conditions or instructions set by the bank.
2) The financial institution, pursuant to sub-section (1), shall obtain a license from the Nepal Rastra Bank subject to the prescribed license and in accordance with the law made by the Province.
3) The regulation, supervision and supervision of financial institutions operating in accordance with this section shall be carried out by the Nepal Rastra Bank.
4) Other arrangements regarding the operation of financial institutions at the state level shall be subject to this Act as provided in the laws of the respective states.
1
Added by the Act to Amend Certain Nepal Acts to Adapt the Constitution of Nepal, 2075.

Bank and Financial Institution Act 2073

Chapter-5 Provisions on License

Section 40: Special Provision on Branch of Foreign Bank
1) In case the Rastra Bank has granted a license to an internationally classified foreign bank to carry on banking and financial transactions through a branch in Nepal, the branch so established in Nepal as per the prevailing law shall be deemed as equivalent to the bank or financial institution established under this Act and unless otherwise provided by this Act or
Rules, By-laws, orders or directives framed under this Act and all other provisions shall be applicable equally, even in the case of such a branch.
2) The Rastra Bank may issue necessary directives with regard to the responsibility of the officials and employees taking responsibility for the functions, duties, powers, responsibility, liability, assets, accounts, etc., of the branch of the foreign bank and carrying out such functions.
3) The branch of a foreign bank located in Nepal shall, while using its assets in the course of bearing its responsibility, give priority to its liability towards Nepal, subject not to adverse effects in any other legal provisions.
4) Notwithstanding anything contained elsewhere in this Act, a branch of the foreign bank may carry on wholesale banking transactions.
5) The function and activities of the branch office of a foreign bank shall be as prescribed by the Rastra Bank.
Bank and Financial Institution Act 2073

Chapter-6 Provisions on Capital, Capital Fund and Liquid Assets

Section 41: Capital to be Maintained
1) The minimum paid-up capital of the bank or financial institutions shall be as prescribed by the Rastra Bank from time to time.
2) Banks or financial institutions shall have to fulfil the minimum paid-up capital pursuant to sub-section (1) within the time frame as set by the Rastra Bank.
3) The Rastra Bank may make provisions that any person, firm, company or institution may only invest up to fifteen percent of the paid-up capital of any one bank or financial institution.
4) While investing in another bank or financial institution by any person, firm, company or institution having investment in one bank or financial institution pursuant to sub-section (3), investment shall have to be made subject to be less than one percent of the paid-up capital of said bank or financial institution.
5) Provisions concerning investment by any person, firm, company or institution in the paid-up capital of any bank or financial institution to be established in a foreign joint venture, “D” class financial institution and infrastructure development bank shall be as prescribed by the Rastra Bank.
6) The percentage of the share capital that may be invested by any person or institution in order to incorporate a bank or financial institution or invest in a bank or financial institution shall be as prescribed by the Rastra Bank from time to time.

Bank and Financial Institution Act 2073

Chapter-6 Provisions on Capital, Capital Fund and Liquid Assets

Section 42: Capital Fund
1) A bank or financial institution shall have to maintain a capital fund in the ratio as prescribed by the Rastra Bank on the basis of its total assets or total risk-weighted assets. The Rastra Bank may, while prescribing such a ratio, also prescribe the ratio of the additional capital funds.
2) If any bank or financial institution fails to maintain the capital fund in accordance with sub-section (1), the Board of Directors of such bank or financial institution shall have to give information thereof to the Rastra Bank within one month.
3) The information given pursuant to sub-section (2) shall also be accompanied by,
inter alia
, the reasons for the failure to maintain the capital fund and the plans or programs prepared by the Board of Directors to increase the capital fund and restore it to the position as prescribed by the Nepal Rastra Bank.
4) On receipt of the information referred to in sub-section (2) and (3) , if the Rastra Bank deems the plan or program submitted by the Board of Directors reasonable, it may give a directive to the concerned bank or financial institution to implement such plans or programs. If any amendment or alteration is to be made in the proposed plans or programs, it may give a direction to the concerned bank or financial institution to amend or alter such plans or programs, stating the reasons for such amendment or alteration and to implement the same.
Bank and Financial Institution Act 2073

Chapter-6 Provisions on Capital, Capital Fund and Liquid Assets

Section 43: Provisions on Possible Loss
A bank or financial institution shall have to make provisions of loan loss as prescribed by the Rastra Bank so as to be able to cover its potential risks concerning assets, including loans and liabilities incurring from the off-balance sheet transactions.

Bank and Financial Institution Act 2073

Chapter-6 Provisions on Capital, Capital Fund and Liquid Assets

Section 44: General Reserve Fund
1) A bank or financial institution shall have to maintain a general reserve fund. At least twenty percent of the net profits of each fiscal year shall have to be added until the paid-up capital is doubled, and at least ten percent shall have to be deposited in every fiscal year after that in such reserve fund.
2) The amount credited to the reserve fund of a bank or financial institution under sub-section (1) may not be invested or transferred to any other headings without obtaining prior approval of the Rastra Bank.

Bank and Financial Institution Act 2073

Chapter-6 Provisions on Capital, Capital Fund and Liquid Assets

Section 45: Exchange Equalisation Fund
(1) A bank or financial institution carrying on foreign exchange business shall make necessary account adjustments in the profit and loss account of the revaluation profits earned as a result of fluctuations in the exchange rates of foreign currencies, other than the Indian currency, every year at the end of the same fiscal year. While making such account adjustments in the profit and loss account, if revaluation earnings have been made in any fiscal year, at least twenty-five per cent of such profits shall be credited to the exchange equalisation fund.
Provided that in the case of revaluation profit-loss resulting from fluctuation in the exchange rate of the Indian currency, it shall be as prescribed by the Rastra Bank.
(2) No amount credited to the exchange equalisation fund pursuant to sub-section (1) shall, without the approval of the Rastra Bank, be spent or transferred for any purpose other than the adjustment of loss resulting from the devaluation of foreign currencies.

Bank and Financial Institution Act 2073

Chapter-6 Provisions on Capital, Capital Fund and Liquid Assets

Section 46: Liquid Assets to be maintained
A bank or financial institution shall have to maintain liquid assets as prescribed by the Rastra Bank from time to time.

Bank and Financial Institution Act 2073

Chapter-6 Provisions on Capital, Capital Fund and Liquid Assets

Section 47: Declaration and Distribution of Dividends
1) A bank or financial institution shall have to obtain approval from the Rastra Bank before declaring and distributing dividends.
2) No bank or financial institution shall be allowed to declare or distribute dividends to its shareholders until it recovers all of its preliminary expenses and the losses sustained by it until the previous year, capital, capital fund and possible loan loss provisioning as prescribed by the Rastra bank and for general reserve fund pursuant to Section 44 and until the complete sale of shares to be allotted to the general public.