Nepal Rastra Bank Act, 2002

Amended by the Second Amendment. 86c. Bank may Take Action against Problematic Commercial Bank or Financial Institution: (1) If the Bank declares any commercial bank or financial institution as problematic pursuant to section 86b, notwithstanding anything contained in the Companies Act or other prevailing laws, Amended by the Second Amendment. the Bank may take control of the management of such commercial bank or financial institution or order the board of directors of the concerned commercial bank or financial institution to take any or all of the following actions:-
(a) Increase paid-up capital by issuing new shares or by calling up unpaid amounts on issued capital,
(b) Suspend the voting rights or other rights of shareholders as necessary,
(c) Prohibit the distribution of dividends or other amounts to shareholders for a specified period to increase capital,
(d) Determine limits on the distribution of bonuses, remuneration, compensation, and other amounts to directors and other senior officials,
(e) Ensure proper arrangements for good governance, internal control, and risk management of the commercial bank or financial institution,
(f) Impose restrictions or set limits on accepting deposits, granting loans, or investing,
(g) Require maintaining higher capital adequacy and liquidity ratios, or restrict business operations, or impose other necessary conditions,
(h) Limit the transactions of the commercial bank or financial institution, or order the sale of assets, or prohibit branch expansion, or order the closure of any branch office within the country or abroad,
(i) Make necessary arrangements to reduce the risk of assets that appear qualitatively doubtful and collateral or other assets not recorded at fair value,
(j) Prohibit actions that cause or are likely to cause loss or damage to the concerned commercial bank or financial institution through irregularities violating prevailing law and the Bank's regulations,
(k) Prohibit the performance of specific types of activities among those permitted to the commercial bank or financial institution for a specific period,
(l) Require prior approval of the Bank for making major capital expenditures, undertaking commitments that create significant liability, or incurring expenditure on contingent liabilities,
(m) Order the removal of one or more directors, managers, or employees as necessary,
(n) If, upon issuing an order pursuant to clause (m), the concerned commercial bank or financial institution does not remove the director, manager, or employee specified in the order, the Bank may itself remove such director, manager, or employee, notwithstanding anything contained in prevailing law,
(o) Suspend the board of directors of the commercial bank or financial institution and take control of its management, conducting or causing to be conducted the management and operations of such commercial bank or financial institution by itself or through an officer appointed by it,

Explanation: "Appointed officer" means one or more persons, firms, companies, or institutions appointed by the Bank to conduct the management and operations of a commercial bank or financial institution taken under its control pursuant to this clause.

(p) Require a commercial bank or financial institution listed on the securities market to apply for delisting its name from the securities market,
(q) Restrict the payment of principal and interest on unsecured subordinated loans of the commercial bank or financial institution,
(r) Take any other action deemed necessary and appropriate by the Bank.

(2) When issuing an order to remove directors, managers, or employees of a commercial bank or financial institution pursuant to clause (m) of sub-section (1) or suspending the board of directors of a commercial bank or financial institution by taking control of its management pursuant to clause (o), such directors, managers, employees, or board of directors shall not be denied a reasonable opportunity for a hearing.