Bank and Financial Institution Act 2073

Chapter – 2 Provisions on Incorporation of Bank or Financial Institution

Section 4: Prior-approval to be obtained to incorporate bank or financial institution
1) The person or institution willing to incorporate a bank or financial institution under Section 3 shall, while submitting an application for getting such bank or financial institution registered according to the prevailing laws, have to submit an application to the Rastra Bank along with the prescribed fee for obtaining prior approval having enclosed therewith the following documents:-
(a) Memorandum of Association of the proposed bank or financial institution,
(b) Articles of Association of the proposed bank or financial institution,
(c) Feasibility study report of the proposed bank or financial institution,
(d) Personal details of applicants in the form as prescribed by the Rastra Bank,
(e) A certified copy of the agreement, if any, made between the applicants prior to incorporation of the bank or financial institution in relation to incorporation of the bank or financial institution,
(f) Evidence of the statement disclosing the sources of income and of tax clearance by the applicants up to the fiscal year immediately preceding the making of an application pursuant to this Section,
(g) Details as to whether or not the applicant of the proposed bank or financial institution is declared bankrupt in Nepal and abroad, whether or not he/she has borrowed any loan from any bank or financial institution, whether or not a person has been blocked in any transaction with a bank or financial institution, if so, whether or not a period of three years is passed after having such blocklisting,
(h) Self-declaration of the applicant stating that no action has been taken and no punishment has been imposed against the applicant in Nepal or abroad for being involved in cheating, fraud or criminal offence as per the prevailing laws,
(i) Details as to whether or not action has been taken against the applicant in Nepal or abroad by any regulating or supervisory authority or whether or not the license of the company, bank or financial institution with which he/she is associated has been suspended, revoked or subjected to mandatory dismissal or is in the course of being so,
(j) Details as to name and address and relationship of the members of the family of the applicant; significant ownership and capacity of each of them and if any of them is a Director, official or employee in any institution; details as to the title of posts each of them holds,
Provided that in case the applicant is a body corporate, details as to the person having substantial ownership or capacity in that body corporate, the audited financial statements of the last three years, as well as the tax clearance certificate of that corporate body shall also be enclosed.
(k) Written authority given to the Rastra Bank to allow it to conduct or to cause to conduct an inquiry as to the financial and professional background of the applicant and to share such notice and information,
(l) An undertaking that the deposits to the limits as prescribed by the Rastra Bank will be guaranteed/insured,
(m) Other details or documents are specified by Rastra Bank from time to time.
2) Rastra Bank may, if it finds appropriate to grant approval upon the examination of the application submitted for prior approval pursuant to SubSection (1) and enclosed documents, grant its approval to incorporate such bank or financial institution within one hundred twenty days after the filing of the application, with or without prescribing any conditions.
3) Notwithstanding anything contained in sub-section (2), no prior approval shall be given to incorporate a bank or financial institution to the following persons and the firms or companies having substantial ownership of such person and of the member of their family:-
(a) Subjected to regulatory actions of the Rastra Bank,
(b) Punished in banking offences,
(c) Punished for cheating, fraud, forgery
(d) Punished in the offence of money laundering and terrorist financing,
(e) Punished in the offence of corruption,
(f) Punished in the serious types of offences such as human trafficking, kidnapping, hostage, and rape.