Banks and Financial Institutions Act, 2017

70. Application to be made for merger, amalgamation or acquisition: (1) If a bank or financial institution wishes to merge into or amalgamate with another bank or financial institution, two or more banks or financial institutions desiring to merge or amalgamate shall, after making decisions from their respective boards of directors, jointly submit an application to Nepal Rastra Bank for in-principle approval, mentioning the following matters:

(a) The necessity and justification for the merger or amalgamation, and a general projection of its impact on the banking and financial sector and the financial system,
(b) The audited balance sheet, profit and loss account and cash flow statement of the merging or amalgamating banks or financial institutions for the latest fiscal year, along with the auditor's report including financial statements such as net assets,
(c) Arrangements made to safeguard the interests of creditors of the merging or amalgamating banks or financial institutions,
(d) True details of the movable and immovable assets and liabilities of the merging banks or financial institutions, including repayment periods,
(e) Details of the management of employees of the merging or amalgamating banks or financial institutions,
(f) Approval process under the prevailing company and securities laws for the purpose of merger or amalgamation,
(g) Preliminary agreement made by the institutions regarding the merger or amalgamation,
(h) Other matters prescribed by Nepal Rastra Bank.

(2) If a bank or financial institution wishes to acquire another bank or financial institution, the two or more concerned banks or financial institutions shall, after making decisions from their respective boards of directors based on a special resolution of their respective general meetings, jointly submit an application to Nepal Rastra Bank for in-principle approval, mentioning the following matters:

(a) The necessity and justification for the acquisition, and a general projection of its impact on the banking and financial sector and the financial system,
(b) The audited balance sheet, profit and loss account and cash flow statement of the acquiring institution and the target institution for the latest fiscal year, along with the auditor's report including financial statements such as net assets,
(c) Details of the management of employees of the acquiring institution and the target institution,
(d) Approval process under the prevailing company and securities laws,
(e) Preliminary agreement made regarding the acquisition,
(f) Other matters as prescribed by Nepal Rastra Bank.

(3) Upon receiving an application under sub-section (1) or (2), Nepal Rastra Bank shall conduct necessary inquiries, and in the course of such inquiries, Nepal Rastra Bank may hold discussions with the applicant and also request additional documents as necessary.

(4) If, from the inquiries made under sub-section (3), Nepal Rastra Bank is satisfied that the merger, amalgamation or acquisition will not have any negative impact on the development of the national banking and financial system, fair competition, and compliance with prevailing law, it may grant in-principle approval to such banks or financial institutions to proceed with the merger, amalgamation or acquisition process, and while granting such approval, Nepal Rastra Bank may also impose conditions or issue directives.