Banks and Financial Institutions Act, 2017

Chapter-12

Compulsory Liquidation of Bank or Financial Institution

78. May file petition in court for compulsory liquidation: (1) Nepal Rastra Bank may file a petition in court to initiate compulsory liquidation proceedings of any bank or financial institution under this Chapter, and notice of such petition for proceedings shall be published in a national daily newspaper.

(2) Along with the petition filed before the court to initiate liquidation proceedings of a bank or financial institution under sub-section (1), Nepal Rastra Bank shall attach the following documents:

(a) Details stating the reason for the existence of a condition under section 79 for compulsory liquidation of the bank or financial institution, and
(b) The financial statements of the bank or financial institution.

(3) Notwithstanding anything contained in sub-section (1), any of the following persons may, with prior approval of Nepal Rastra Bank, file a petition in court for liquidation, stating the grounds for the existence of a condition under section 79 that may lead to compulsory liquidation of the bank or financial institution:

(a) A collective application by depositors representing more than twenty-five percent of the deposit amount payable or more than one percent of depositors who do not receive payment when demanding payment of payable deposit amount, or
(b) A person competent to file a petition for compulsory liquidation under the prevailing insolvency law.

(4)

(ख) To carry out essential regular functions of operation and management of a bank or financial institution,

(ग) To do or cause to be done all work required to be performed by or in the name of the bank or financial institution,

(घ) To appoint employees to assist in the performance of its work,

(ङ) To incur necessary expenses for the operation, management, and liquidation of the bank or financial institution,

(च) To coordinate with the institution established pursuant to the prevailing law for deposit protection,

(छ) To exercise all powers exercised by the shareholders, general meeting, board of directors, and office bearers of the bank or financial institution,

(ज) To examine and investigate the business and financial condition of the bank or financial institution,

(झ) With the approval of Nepal Rastra Bank, to merge or transfer all or part of the assets and liabilities of the bank or financial institution to another bank or financial institution,

(ञ) To obtain loans by securing the property of the bank or financial institution,

(ट) To sell any property or terminate any contract or liability if it appears beneficial to the bank or financial institution to do so,

(ठ) To obtain the services of professional and qualified persons to assist in its work as necessary,

(ड) To conduct necessary discussions and settlements with any creditor or debtor of the bank or financial institution,

(ढ) To collect, preserve, sell, and distribute the property of the bank or financial institution in accordance with this Act,

(ण) To investigate whether any director, office bearer, employee, or any person has acted to defraud, cheat, or deceive the bank or financial institution, depositors, or creditors, and to initiate necessary legal action against such persons, or to institute or defend any case or legal action on behalf of the bank or financial institution,

(त) To recover any property of the bank or financial institution that has been used by someone, or to initiate legal action to recover such property or amounts from void transactions,

(थ) To prepare a report on the actions taken regarding liquidation in the format prescribed by Nepal Rastra Bank every three months and submit it to the court and Nepal Rastra Bank,

(द) To do or cause to be done all other work necessary for liquidating a bank or financial institution,

(ध) To perform other functions as specified by Nepal Rastra Bank.

(4) If any obstacle arises while exercising any power or performing any duty under this Chapter, the Liquidator may submit a petition to the court for the resolution thereof.

(5) If the reasons mentioned in the petition filed pursuant to sub-section (4) appear reasonable, the court may issue an appropriate order.