Banks and Financial Institutions Act, 2017

4. Prior Approval Required Before Establishing a Bank or Financial Institution: (1) For the purpose of Section 3, before submitting an application to register a bank or financial institution under the prevailing law, the concerned person or institution must submit an application to the Nepal Rastra Bank for prior approval, accompanied by the following documents and the fee prescribed by the Nepal Rastra Bank:-

(a) Memorandum of Association of the proposed bank or financial institution,
(b) Articles of Association of the proposed bank or financial institution,
(c) Feasibility study report of the proposed bank or financial institution,
(d) Personal details of the applicant in the format prescribed by the Nepal Rastra Bank,
(e) Certified copy of any agreement entered into between the applicants for establishing the proposed bank or financial institution, if any,
(f) Details disclosing the source of investment of the applicant and proof of tax payment up to the immediately preceding fiscal year before submitting the application under this section,
(g) Details of whether the applicant is insolvent in Nepal or abroad, has not taken loans from any bank or financial institution, has been blacklisted in any transaction with a bank or financial institution, and if blacklisted, whether three years have elapsed since the removal from such blacklist,
(h) Self-declaration that no proceedings are pending against the applicant in Nepal or abroad for fraud, forgery, or acts deemed offenses under prevailing law, and that no punishment has been imposed for such criminal acts,
(i) Details of whether the applicant has been subject to action by any regulatory or supervisory body or authority in Nepal or abroad, whether the license of any company or institution with which the applicant is associated has been suspended or revoked, or whether it has been or is in the process of being compulsorily wound up,
(j) Details including the name, surname, relationship of family members of the applicant and details of significant ownership or significant status, and if such persons have worked as directors, officers or employees in any institution, the designation of each person,
Provided however, that if the applicant is a corporate body, details of persons having significant ownership or status in such corporate body, audited financial statements for the last three fiscal years, and the tax clearance certificate of such corporate body must also be attached.
(k) Written authorization given to the Nepal Rastra Bank to conduct or cause to be conducted inquiries regarding the financial and business background of the applicant, or to exchange such information and knowledge,
(l) Commitment to insure deposits up to the limit prescribed by the Nepal Rastra Bank,
(m) Other details and documents prescribed by the Nepal Rastra Bank from time to time.

(2) If, upon examining the application for prior approval received under sub-section (1) and the documents attached thereto, it appears appropriate to grant approval, the Nepal Rastra Bank may, with or without imposing any condition, grant prior approval to establish such bank or financial institution within one hundred and twenty days from the date of receipt of such application.

(3) Notwithstanding anything contained in sub-section (2), prior approval to establish a bank or financial institution shall not be granted to the following persons and firms or companies in which the family members of such persons have significant ownership:-

(a) Who has been subject to regulatory action by the Nepal Rastra Bank,
(b) Who has been punished for a banking offense,
(c) Who has been punished for fraud, forgery, or counterfeiting,
(d) Who has been punished for an offense relating to money laundering or terrorist financing,
(e) Who has been punished for a corruption-related offense,
(f) Who has been punished for serious nature offenses such as human trafficking, kidnapping, hostage-taking, or rape.