Banks and Financial Institutions Act, 2017

Provided that this shall not affect the depositor's right to the amount in his account by reason of no claim having been filed on it. Chapter 13

Provisions Relating to Actions, Offences and Penalties

99. Power to Take Regulatory Action: (1) A bank or financial institution that violates this Act or the Nepal Rastra Bank Act or the rules, regulations, directions, or orders issued thereunder may, depending on the nature and seriousness of the violation, be subject to one or more of the following actions by Nepal Rastra Bank:

(a) Issue a warning or written caution,

(b) Require the board of directors to sign an undertaking to take corrective measures,

(c) Issue a written order not to violate this Act or the Nepal Rastra Bank Act or the rules, regulations, directions, or orders issued thereunder, or to take corrective measures,

(d) Prohibit the distribution of dividends or issuance of bonus shares by the bank or financial institution to its shareholders, or restrict the distribution of dividends or issuance of bonus shares,

(e) Set limits on or prohibit the acceptance of deposits or granting of loans by the bank or financial institution,

(f) Impose a partial or full restriction on the transactions of the bank or financial institution.

(2) Nepal Rastra Bank may suspend or cancel the license to conduct banking and financial transactions granted to a bank or financial institution in the following circumstances:

(a) If it fails to commence banking and financial transactions within six months from the date of obtaining the license,

(b) If it ceases banking and financial transactions without the approval of Nepal Rastra Bank,

(c) If it conducts banking and financial transactions contrary to the interests of depositors, or fails or is unable to repay demand deposits or deposits that have matured when demanded,

(d) If it violates or fails to comply with the Nepal Rastra Bank Act, this Act, or the rules, regulations, directions, orders, or conditions specified by Nepal Rastra Bank,

(e) If the bank or financial institution is found to have obtained the license by submitting false details,

(f) If it fails to provide deposit protection as per the prevailing law.

(3) If any founder, shareholder, director, chief executive, office bearer, employee, or any other concerned person of a bank or financial institution violates this Act or the Nepal Rastra Bank Act or the rules, regulations, directions, or orders issued thereunder, Nepal Rastra Bank may, depending on the nature and seriousness of the violation, take one or more of the following actions:

(a) Confiscate and attach the shares of such bank or financial institution held by such person and direct the board of directors to sell such shares to other persons,

(b) Direct the board of directors to withhold or suspend some or all facilities, including meeting allowance, monthly remuneration, of the board of directors, directors, office bearers, and other employees of the bank or financial institution,

(c) If it is found, from the inspection or monitoring of Nepal Rastra Bank, that the chairman, director, chief executive officer, or any person acting as chief executive, or employee of the bank or financial institution has not acted in the interest of the depositors, shareholders, and the licensed institution, remove such person from office by giving written notice,

Provided that, while taking action under this clause, such person shall be given a period of three to fifteen days to submit a defense against the allegation made against him.