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

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

Section 48: Order may be issued to decrease Capital
Notwithstanding anything contained in the prevailing laws, the Rastra Bank may issue an order to decrease the issued and paid-up capital of a bank or financial institution.
Bank and Financial Institution Act 2073

Chapter -7 Provisions on Operation of Banking and Financial Transactions

Section 50: Acts not to be carried out by Bank or Financial Institution
1) A bank or financial institution shall not have to carry out or cause to be carried out any of the following acts:-
(a) To purchase and sell goods with the objective of the business and to purchase immovable land and to construct buildings except those that are necessary for its own purposes,
(b) To disburse credit against security of one’s own shares,
(c) To provide any type of credit facility to the Directors, a person having subscribed one percent or more than that of the paid-up capital, Chief Executive, or a member of the family of such persons, or the firm, company or organization having significant ownership or financial interest in any person, firm, company or organization having authority to nominate or appoint Director or managing agent,
(d) To provide any type of credit or facility exceeding per customer limit prescribed by the Rastra Bank from its capital fund to the single customer, company, companies or partnership firms of the same group and relevant person,
(e) To provide any type of credit to any person, firm, company or institution on the guarantee of promoters, Directors, or Chief Executive,
(f) To make an investment in the securities of the bank or financial institutions of class “A”, “B”, and “C”, classified by the Rastra Bank,
(g) To invest the amount more than the limit as prescribed by the Rastra Bank in the share capital of other institutions,
(h) To create any type of monopoly or other type of restrictive practices in banking and financial transactions in collusion with banks or financial institutions,
(i) To commit in any act to create an artificial hurdle in a competitive environment in financial sectors with the intention of getting an undue advantage,
(j) To carry out any other functions prescribed by the Rastra Bank, as the functions are not to be carried out by a bank or financial institutions.
2) Notwithstanding anything contained elsewhere in this Act, there shall be no restriction to carry on own banking and financial transactions or to provide housing or other facilities for its own employees according to prevailing Personnel Byelaws of bank or financial institution, to disburse any credit against the collateral security of the bond issued by Government of Nepal or Rastra Bank, amount deposited in any account or fixed deposits receipts or to make available credit and credit card facilities up to the prescribed limit to promoters, Directors, Chief
Executive or shareholders having subscribed more than one percent of shares against the collateral security of their own fixed deposit receipts and the bonds issued by the Government of Nepal or the Rastra Bank.
Bank and Financial Institution Act 2073

Chapter -7 Provisions on Operation of Banking and Financial Transactions

Section 51: Provisions concerning Subsidiary Company
1) A bank or financial institution may incorporate a subsidiary company with approval from the Rastra Bank.
2) The Rastra Bank may prescribe necessary terms and conditions while granting approval pursuant to sub-section (1).

Bank and Financial Institution Act 2073

Chapter -7 Provisions on Operation of Banking and Financial Transactions

Section 52: Prohibition on carrying out transactions with relevant persons
No bank or financial institution shall be allowed to provide any type of loan or facilities to the relevant persons.

Bank and Financial Institution Act 2073

Chapter -7 Provisions on Operation of Banking and Financial Transactions

Section 53: Information of Suspicious Transaction to be furnished
A bank or financial institution shall have to take actions as per the provision mentioned in the prevailing law preventing money laundering and terrorist financing with regard to informing about suspicious transactions with its account holder or customer having had transactions with it.

Bank and Financial Institution Act 2073

Chapter -7 Provisions on Operation of Banking and Financial Transactions

Section 54: Rastra Bank may issue Directive
The Rastra Bank may issue necessary directives with regard to procedural aspects and other matters to be followed by the bank or financial institutions while carrying out activities under this Chapter.
Bank and Financial Institution Act 2073

Chapter -8 Provisions on Disbursement and Recovery of Credits

Section 55: Provisions on Disbursement of Credit
1) A bank or financial institution shall have to disburse credit only after disclosing the purpose subject to the directives issued by the Rastra Bank from time to time and the credit policy as determined by the Board of Directors.
2) While disbursing credit, a bank or financial institution shall have to obtain any movable or immovable property acceptable to it as collateral security or an appropriate guarantee so as to safeguard the interests of its own and of the depositors.
3) A bank or financial institution shall have to write to the concerned office to withhold any property which it has taken up as collateral security against a credit pursuant to this Section in the name of the bank or financial institution so that such property may not be registered in the name of, or transferred to, any person in any manner whatsoever.
4) When requested in writing to withhold, registration or transmission of property pursuant to sub-section (3), the concerned office shall have to withhold the registration or transmission thereof accordingly.
5) In case the Rastra Bank gives direction to disburse credits for such class and in such area as prioritized for the economic upliftment of the persons belonging to a low-income group and indigent class and of the inhabitants residing in any specific geographical region, to banks or financial institutions shall have to disburse credits according to the direction.
6) The terms and conditions, repayment schedule, and interests of the credits borrowed by the borrower shall be according to the deeds or agreement executed between the bank or financial institution and the borrower.
7) The bank or financial institution shall have to collect the necessary details of identity documents of the borrower, guarantor or, if the borrower is a firm, company or an institution, the directors, the shareholders having subscribed the shares in numbers more than the percent prescribed by the Rasta Bank or partners or owners in any manner thereof; the members of families of all of the above persons and if any of them is a beneficiary of any institution, and evidence of identity that may be required while taking legal actions.
8) While disbursing any credit by a bank or financial institution to anyone, the regular instalment of the credit, interests, penal interests, and repayment schedule shall have to be clearly specified in the deed or contract, and information thereof must be given to the borrower and guarantor.
9) A borrower may request details of the payable or paid principal, interests, penal interests, and other fees and the deed or contract executed in the course of availing the credit and the bank or financial institution shall have to make such details available.
Bank and Financial Institution Act 2073

Chapter -8 Provisions on Disbursement and Recovery of Credits

Section 56: Monitoring as to Utilization of Credit Amount
A bank or financial institution shall have to carry out regular monitoring by preparing a monitoring schedule as to whether or not the borrower has utilized the credit for the purpose for which it has been disbursed.
Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 58: Accounts to be maintained accurately
1) A bank or financial institution shall have to maintain its accounts, books, and records precisely and correctly.
2) The accounts to be maintained pursuant to sub-section (1) shall have to be maintained according to the recognized principle of a double-entry bookkeeping system reflecting the exact status of transactions of the bank or financial institution.
3) Without prejudice to the generality of sub-section (1) and (2), a licensed branch or office of a foreign bank or financial institution shall have to prepare and maintain financial statements, including separate accounts, books and records of its assets, liabilities, income and expenses and profit and loss accounts.
4) Unless otherwise approved by the Rastra Bank, the accounts and other statements to be maintained pursuant to sub-section (1) shall have to be maintained at its central office.

Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 59: Balance-sheet, Profit and Loss Accounts to be prepared
1) The bank or financial institution shall have to prepare and maintain its balance sheet, profit and loss account cash flow statement and other statements in the formats as prescribed by the Rastra Bank.
2) The bank or financial institution shall have to submit a balance, profit and loss account to the Rastra Bank within three months of the completion of every fiscal year, and details of such balance sheet and profit and loss account shall have to be published for the information of general public as prescribed by the Rastra Bank. A bank or financial institution shall have to publish the audited balance sheet of every Fiscal Year and the profit and loss account of the transactions within and outside Nepal as in the prescribed formats within nine months of the next fiscal year.
3) If a bank or financial institution has its subsidiary company, the balance-sheet profit and loss accounts and status of transaction of business of the subsidiary company and parent company must be separately stated and stated in an integrated manner as well.
4) The format, contents, methods of certification and details of the matters to be made public in the balance sheet and profit and loss accounts to be prepared by banks or financial institutions under this Chapter shall be as prescribed or directed by the Rastra Bank.
5) In case the Rastra Bank has suspicion that any details publicized by a bank or financial institution pursuant to sub-section (2) are erroneous, incomplete, misleading or false, the Rastra Bank may require notification in writing to the concerned bank or financial institution to do as follows:-
(a) To publicize the matters escaped or not stated, or
(b) To re-publicize the details which are erroneous, incomplete, misleading or false, or
(c) To publish by making corrections of the matters required by directives of the Rastra Bank.
Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 60: Audit Committee
1) The Board of Directors of a bank or financial institution shall have to form an Audit Committee comprising three members under the headship of one non-executive Director.
2) The Chairperson of the bank or financial institution, convener of the sub-committee and the Chief Executive shall not be allowed to act in the audit committee referred to in sub-section (1).
3) Members of the committee referred to in sub-section (1) shall not be entitled to be engaged in collecting deposits, disbursing credits, investing in securities, and making decisions in any daily transaction that requires making expenses out of the approved budget.
4) Except in cases of meetings called by the Board of Directors, meetings of the Audit Committee shall normally be held once every three months.
5) Procedures of the meeting of the Audit Committee shall be as prescribed by the committee itself.

Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 61: Functions, Duties and Powers of the Audit Committee
Functions, duties and powers of the Audit Committee shall be as follows:-
(a) To ascertain whether or not the accounts, budget and internal auditing procedures, and internal control mechanisms of bank and financial institution are appropriate and, if they are appropriate, to carry out monitoring and supervision, whether or not they are complied with,
(b) To cause to carry out internal auditing of the accounts and books of records of the bank or financial institution and to ascertain whether or not such documents are prepared according to the prevailing law, regulation and directives of the Rastra Bank,
(c) To conduct or to cause to conduct auditing of management and operation, managerial and work performance of the bank or financial institution to be assured that the laws in force in the bank or financial institution are fully complied with,
(d) To carry out monitoring of whether or not actions are being taken according to the Act or Rules enacted under the Act, Byelaws, policies or given directives in the bank or financial institution and to submit the report thereof to the Board of Directors,
(e) To recommend names of three auditors for appointment of the  external auditor,
(f)To furnish opinion on the subjects as required by the Board of Directors.
Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 62: Auditing
1) A bank or financial institution shall, within four months from the date of completion of the Fiscal Year, have to prepare the balance sheet, profit and loss account, cash flow statement and other financial statements in the formats and according to the methods specified by the Rastra Bank and get the external audit conducted. Such financial statement shall have to be signed by at least two Directors, the Chief Executive and the auditor.
Provided that it shall be as prescribed by the Rastra Bank in case of a branch office of a foreign bank or financial institution carrying on financial transactions by getting approval from the Rastra Bank.
2) In case the bank or financial institution not completing the auditing within the period referred to in sub-section (1) makes a request for an extension of time for auditing, stating reasonable cause, the Rastra Bank may extend the period up to two months.
3) The external auditor shall have to submit the audit report to the concerned bank or financial institution and the Rastra Bank as well.

Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 63: Appointment and Remuneration of Auditor
1) The General Meeting of a bank or financial institution shall appoint an auditor.
2) The General Meeting shall not appoint the same Auditor for more than three consecutive times.
3) While appointing an auditor pursuant to sub-section (1), the General Meeting shall appoint a Chartered Accountant in the case of a licensed bank or financial institution of Class “A” or “B” or “C”, and a Chartered Accountant or a Registered Auditor in the case of a bank or licensed bank or financial institution of Class “D”.
4) In case any bank or financial institution does not or could not appoint an auditor pursuant to sub-section (1), the Rastra Bank may appoint the Auditor.
5) In case the position of Auditor falls vacant for any reason whatsoever, the Board of Directors shall appoint another Auditor for the remaining period.
6) The remuneration of an auditor of a bank or financial institution shall be as determined by the Rastra Bank in case the Auditor has been appointed by the Rastra Bank, as determined by the General Meeting in case the Meeting has appointed, and as determined by the Board of Directors, in case the Board has appointed the Auditor.
Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 64: Ineligibility for Appointment as Auditor
1) Any of the following persons or any firm, company or institution in which such person is a promoter or partner shall not be eligible to be appointed as an auditor of a bank or financial institution: –
(a) A promoter, Director, Chief Executive of a bank or financial institution or his\her family member,
(b) An official, employee or internal auditor of the bank or financial institution,
(c) A person working as a partner of any promoter, Director or employee of the bank or financial institution,
(d) A borrower of the bank or financial institution, a person with significant ownership or a relevant person or person having financial interests,
(e) A person who has been declared bankrupt in Nepal or abroad,
(f) A person, firm, company or institution having subscribed one percent or more shares of the bank or financial institution,
(g) A person who has been punished in any criminal offence by the court and a period of five years has not lapsed after he or she has served the punishment,
(h) A person who is disqualified to become an auditor according to prevailing laws.
2) If any person appointed as auditor of a bank or financial institution is found to be ineligible pursuant to sub-section (1), his/her appointment shall be deemed to have been
ipso facto
invalid.

Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 65: Details to be Furnished
1) A bank or financial institution shall, at all times, provide all such accounts, records, books, ledgers and other statements as demanded by the auditor in the course of performing the audit.
2) For the purpose of sub-section (1), the officer responsible for providing an accurate statement or answer as demanded shall also have to furnish forthwith an accurate statement or answer to the queries made by the auditor.
Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 67: Recommendation for taking actions against Auditor
1) The Rastra Bank shall write to the concerned regulating authority to remove the name of an auditor who does not perform his/her duties as per this Act from the panel of the auditors subject to prohibit him/her from carrying out an audit of any bank or financial institution for one year to three years.
2) In case of recommendation pursuant to sub-section (1), the concerned regulating agency shall have to take action against such auditor as per the prevailing laws.

Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 68: Auditor to certify
The auditor shall mark the accounts, records, books and ledgers audited by him/her by affixing his /her signature thereon and also mentioning therein the date on which he/she has audited them.
Bank and Financial Institution Act 2073

Chapter-10 Provisions on Merger and Acquisition of Bank or Financial Institutions

Section 69: Bank or Financial institutions may be merged or acquisition
1) One bank or financial institution may be merged with another bank or financial institution, or one bank or financial institution may acquire another bank or financial institution by fulfilling the procedures prescribed by this Act and the Nepal Rastra Bank Act.
2) A class “D” financial institution may be merged with, or such institution may acquire another institution of the same class.
Provided that an infrastructure development bank and a bank or financial institution may not be merged into each other, and none of them may acquire the other.
3) Notwithstanding anything contained elsewhere in this Chapter, in case any of the following circumstances are found from an Inspection and Supervision Report of the Rastra Bank, the Rastra Bank may order such bank or financial institution or any of its assets, liabilities, or business to merge or be merged into another bank or financial institution:-
(a) Capital fund is inadequate or financial position has been deteriorating for last three years,
(b) An act causing an adverse effect on depositor’s interests and liabilities towards depositors or such situation is prevailing,
(c) It is necessary to enhance the competitive capacity at the national and international levels for stability, development, and promotion of the state’s financial system.
4) Notwithstanding anything contained elsewhere in this Chapter, in case any of the following circumstances are found from an Inspection and Supervision Report of the Rastra Bank, the Rastra Bank may order such bank or financial institution to acquire or cause to be acquired another bank or financial institution, having stated the reasons thereof:-
(a) In case more than one bank or financial institution belonging to single group of persons, firms and companies are in operation and there is unhealthy financial relation,
(b) In case the rights and interests of the depositors, ordinary shareholders, and other customers could not be protected due to the negative impact if the bank or financial institution is operated in the status quo,
(c) System-based risks are increased, and the licensed institution is unable to pay its liabilities,
(d) In case shares have not been issued in the ordinary group within the prescribed time, the issued shares have not been sold or subscribed, or the prescribed minimum proportional paid-up capital has not been met,
(e) In case a bank or financial institution is subjected to actions of rapid reforms for three times or more or good governance has become weak due to the arising of frequent disputes in the Board of Directors of the bank or financial institution.
5) While issuing an order by the Rastra Bank pursuant to sub-section (3) or (4) for merger or acquisition of bank or financial institutions, it may specify the procedures thereof in such order.
Bank and Financial Institution Act 2073

Chapter-10 Provisions on Merger and Acquisition of Bank or Financial Institutions

Section 71: Provisions concerning Valuation of Assets and Liabilities
1) Upon obtaining theoretical approval of merger of bank/s or financial institution/s pursuant to Section 70, such bank/s or financial institution/s shall have to appoint, on mutual consent a person, firm, company or institution that is at least capable for auditing of bank for valuation of their respective assets, liabilities, and transactions and information thereof must be furnished before the Rastra Bank.
Provided that, the bank or financial institutions may carry out such valuation to be conducted before submitting application to the Rastra Bank.
2) Upon obtaining theoretical approval to acquire a bank or financial institution pursuant to Section 70, the target institution shall have to get the auditing of its assets, liabilities and transactions through an auditor appointed by the General Meeting or by the Board of Directors under the authority of the General Meeting.
3) The acquiring institution may also conduct comprehensive valuation of the assets and liabilities of the target institution.
4) In case the Rastra Bank does not find actions of the Valuator appointed pursuant to sub-section (1) or (2) credible, it may remove him/her and order to concerned bank or financial institution to appoint another valuator.
5) The terms and conditions of services of the valuator shall be as determined by the concerned bank or financial institution.
6) While valuating the assets, liabilities, net worth, and overall transaction by the valuator, it has to be carried out according to the established norms, bases and procedures.
7) The Rastra Bank may issue necessary directives as to the methods of valuation, bases of valuation and scope thereof.