Bank and Financial Institution Act 2073

Chapter-13 Provisions on Actions, Offences and Punishment

Section 99: Regulatory Actions may be taken
1) In case a bank or financial institution is found to have violated this Act, the Rastra Bank Act, or Rules, Directives, or Orders issued thereunder, the Rastra Bank may, depending upon the nature and gravity of the violation, take one or more of the following actions against the bank or financial institution:-
(a) To make aware or issue a warning in writing,
(b) To cause the Board of Directors to enter into a deed of commitment for taking reformative steps,
(c) To issue an order in writing not to violate this Act or Rastra Bank Act or Rules, By-laws, Directives or Order framed thereunder or to take reformative steps,
(d) To prohibit distributing dividends or issuing bonus shares to the shareholders of bank or financial institutions or to prohibit acts of distributing dividends or issuing bonus shares,
(e) To specify limits on, or prohibit, accepting deposits or disbursing credits or the Act of accepting deposits or disbursing credits by bank or financial institution,
(f) To impose a complete or partial ban on transactions of a bank or financial institution.
2) The Rastra Bank may suspend or revoke the license to carry out banking or financial transactions issued to a bank or financial institution in the following circumstances:-
(a) In case banking and financial transactions are not initiated within six months from the date of obtaining the license for carrying on banking and financial transactions,
(b) In case banking and financial transactions have been closed without obtaining approval from the Rastra Bank,
(c) In case of operation of banking and financial transactions against the interests of depositors or demanded or matured deposits are not repaid or could not be repaid while on-demand,
(d) In case of violation or non-compliance of the Rastra Bank Act, this Act, and the Rules, By-laws, Orders, Directives framed thereunder or the terms and conditions as prescribed by the Rastra Bank,
(e) In case the bank or financial institution is found to have taken a license having submitted a false description,
(f) In case the deposits have not been guaranteed as per the prevailing laws.
3) In case a promoter, shareholder, Director, Chief Executive, official, employee or any other relevant person of a bank or financial institution violates this Act or Rastra Bank Act, or Rules, By-laws, Directives, or Orders issued thereunder, the Rastra Bank may, having regard to the nature and gravity of the violation, take one or more of the following actions and impose fines as well:-
(a) To forfeit and freeze the shares of the concerned bank or financial institution as he/she has subscribed and to direct the Board of Directors to sell the said shares to other persons,
(b) To direct the Board of Directors to stop or suspend some or all of the facilities, including meeting allowance monthly remuneration to be entitled to the Board of Directors, Director, official, employee or any other relevant person of a bank or financial institution,
(c) In case the Chairperson, Director, Chief Executive or the person to act as in the capacity of the Chief Executive or an employee is, upon an inspection or monitoring of the Rastra Bank, not found to have worked in the interests of depositors, shareholders, and licensed institution, he/she may be removed from the said position by furnishing a written notification to that effect.
Provided that while taking actions under this Clause, a time limit of three to fifteen days shall be given to such person to submit explanations of the allegation. In case such a person is terminated from the service, he/she shall not be entitled to any compensation or benefits as referred to in the Personnel By-laws, and he/she shall be deemed to be disqualified for service in any bank or financial institution for a period of five years after such actions.
(d) In case the Director, official or other employee subjected to actions does not receive the letter of taking actions or does not submit the explanation after receiving the letter while taking actions pursuant to Clause (c), the Rastra Bank may inform the taking of actions against through public notice,
(e) In case any bank or financial institution is found to have taken or given remuneration or other facilities against this Act or in an unnatural manner, to recover all of such facilities or the amount to be required for such facilities and the interests to be accrued thereon from the person gives such facilities,
(f) To issue an order to the bank or financial institution to write to the concerned agency to take action against a Director, official or employee of the bank or financial institution where he/she is professionally affiliated.
4) In case the amount to be paid by a bank or financial institution has been found to have been paid or incurred because of recklessness or negligence of any Director, official or employee, the Rastra Bank may issue an order to recover the amount from such Director, official or employee.
5) The Director, official or employee shall have to pay such amount on a personal basis within 35 days from the date of receiving the order issued pursuant to sub-section (4).
6) In case the amount payable within the time limit as referred to in sub-section (5) is not paid, said amount shall be recovered from any account of such Director, official or employee or in any family member’s name at any bank or financial institution or from any movable or immovable assets in his/her name or in any family member’s name, as the Government due.
7) In case the Rastra Bank carries out regulation, inspection, supervision or any other actions of any bank or financial institution under this Section and publishes or broadcasts public notices thereof, the concerned bank or financial institution shall have to pay the expenses to be incurred for publishing or broadcasting such notices