Nepal Rastra Bank Act, 2058

Chapter 9 Regulation, Inspection and Supervision of the Banks

Section 79: Regulatory Powers of the Bank
1) The Bank shall have full powers to regulate the functions and activities of commercial banks and financial institutions.
2) For the purpose of the regulation under sub-section (1), the Bank may frame rules and bylaws on the matters which the Bank deems appropriate and issue necessary order, directives and circular and it shall be the duty of the concerned commercial bank and financial institution to abide by such Rules, bylaws, order, directives and circular.
3) The Bank shall issue appropriate directives to commercial banks and require them to submit the following particulars:
(a) Its balance sheet accounts, off-balance sheet commitments, statement of income and expenditures and their ratio among accounts or items.
(b) Prohibitions, restrictions or conditions concerning specific types or forms of credit or investments, or of credit or investments, forms of commitments of a risk-bearing nature which are not matching as to maturity of assets and liabilities and off-balance-sheet items, foreign currency, spot or advance rate of interest, swap, option or similar instruments or access to the payments system through electronic or other means.
(c) Other particulars and documents prescribed by the Bank.
4) The Bank may issue necessary directives to commercial banks on the following matters and require them to submit particulars on the following subjects:
(a) Books and accounts, profit and loss account, balance sheet, off-balance-sheet transactions and commitments, statement of income and expenses, and their ratio among accounts or items.
(b) Prohibitions, restrictions or conditions concerning specific types or forms of credit or investments, loans and investments in excess of the ceiling prescribed by the Bank, risk-bearing commitments, positions in foreign exchange, payments and electronic and other means of payment.
(c) Other particulars and documents prescribed by the Bank.
*4a) For the purpose of preventing financial investment in the money laundering and terrorist activities, the Bank can give necessary directives to the commercial banks and financial institutions regarding providing financial information unit established as per existing law relating to money laundering prevention, knowing the customers and classifying and managing the risk of the customers, the description of the limit including money transfer, deposit, or doubtful transaction.
5) The Bank shall have the following powers with regard to commercial banks and financial institutions:
(a) To enforce authority and responsibility granted under this Act and any other Act enacted for licensing, supervising and regulating commercial banks and financial institutions and to revoke the license of commercial banks and financial institutions and to take over or to provide in trusteeship the commercial banks or financial institutions which have been declared insolvent or are on the verge of insolvency,
(b) To investigate or inspect, or supervise or to cause to investigate, inspect or supervise by any official of the Bank or the person designated by the Bank the books and accounts, records, documents or register of commercial banks or financial institutions in order to find whether or not any commercial bank or financial institution has conducted business and transaction in accordance with the provision made under this Act or the Rules, Bye-laws framed thereunder and an order or directive issued thereunder,
(c) To issue an order to a member of the Board of Directors, an official or an employee of any commercial bank or financial institution, to provide necessary information about the bank or institution in cases where it is necessary to inspect and supervise the transaction of such a bank or financial institution.
* Added By the Second Amendment.