chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Negotiable Instruments Act, 1977

When causing it to be noted, the date and reason for the dishonour must be mentioned, and if the negotiable instrument is not clearly dishonoured, but the holder considers it dishonoured, the reason must also be clearly stated. 72. Protest for Dishonour: After causing it to be noted pursuant to section 71, the holder may have the fact of dishonour certified (protested) by a Notary Public. 73. Protest for Better Security: Before the maturity of a bill of exchange, if the acceptor becomes insolvent or bankrupt, the holder may, within a reasonable time, apply to a Notary Public and cause a demand for better security to be made. If better security is not given upon such demand, the holder must have this fact certified by a Notary Public within a reasonable time. 74. Contents of Protest: When causing the fact of dishonour or refusal to give better security to be certified, the following details must be included:-
 (a) The negotiable instrument or a copy thereof, and everything written or printed thereon;
 (b) The name of the party and the opposite party;
 (c) A statement from the Notary Public regarding the demand for acceptance, payment, or better security made to such person, and if such person gave a reply, the details thereof, or if no reply was given, a statement to that effect, or if the person could not be found after search, a statement to that effect;
 (d) If the negotiable instrument was dishonoured, the place and time of dishonour, and the place and time of refusal to give better security. 75. Certified Notice: Where, under any prevailing law, the fact of dishonour of a negotiable instrument must be certified, a notice certified by a Notary Public must be sent in lieu of a notice of dishonour. Such notice may also be sent by the Notary Public who certifies it. 76. Protest for Non-Payment after Dishonour by Non-Acceptance: For all bills of exchange drawn payable at a place other than the place mentioned as the drawee's residence, if the drawee dishonours them by non-acceptance, they may be protested for non-payment at the place where payment is due, without being re-presented to the drawee. 77. Protest of Foreign Bills: If, according to the law of the country where a foreign bill of exchange is issued, the fact of dishonour must be certified, such foreign bill of exchange must also be protested by a Notary Public. Chapter-7
Reasonable Time

78.
Negotiable Instruments Act, 1977

77. Protest of Foreign Bills: If, according to the law of the country where a foreign bill of exchange is issued, the fact of dishonour must be certified, such foreign bill of exchange must also be protested by a Notary Public. Chapter-7
Reasonable Time

78. Determination of Reasonable Time: In determining what is a reasonable time for presentment for acceptance or payment of a negotiable instrument, for giving notice of dishonour, and for noting, regard shall be had to the nature of the instrument and the usual course of dealing with respect to similar instruments. In calculating time, a public holiday shall be excluded. 79. Determination of Reasonable Time for Notice of Dishonour: If the holder and the party entitled to notice of dishonour carry on business or reside in different places, such notice shall be deemed to have been given within a reasonable time if it is sent by registered post or other means to those persons on the day next after the day of dishonour. If both parties carry on business or reside in the same place, such notice shall be deemed to have been given within a reasonable time if it is sent so as to reach that place on the day next after the day of dishonour. 80. Reasonable Time for Notice to Render Prior Party Liable: If a party receiving notice of dishonour wishes to render a prior party liable to him, a notice sent by him within the same time within which he would have had to send it had he been the holder, after receiving such notice, shall be deemed to have been sent within a reasonable time. Chapter-8

Crossed Cheques

81. General Crossing: A cheque is deemed to be crossed generally if its face bears two parallel transverse lines with the words "and company" or any abbreviation thereof written between them, or bears two parallel transverse lines alone, whether or not the words "not negotiable" are written. 82. Special Crossing: A cheque is deemed to be crossed specially if its face bears the name of a banker, whether or not the words "not negotiable" are written. 83. Crossing after Issue: (1) The holder of an uncrossed cheque may cross it generally or specially. (2) The holder of a cheque crossed generally may cross it specially. (3) The holder may add the words "not negotiable" to a cheque crossed generally or specially. (4) A banker to whom a cheque is crossed specially may re-cross it specially in the name of another banker or his agent when sending it for collection. (5) The drawer of a crossed cheque may cancel the crossing. 84.
Negotiable Instruments Act, 1977

84. Payment of Crossed Cheques: (1) Payment of a crossed cheque generally shall not be made to any person other than a banker. (2) Payment of a crossed cheque specially shall not be made to any person other than the banker in whose name it is crossed, or his agent. 85. Payment of Cheque marked "Account Payee": Payment of a crossed cheque bearing the words "account payee" shall be made by the banker only by crediting the account of the person in whose name the cheque is drawn. 86. Payment of Cheque with Multiple Special Crossings: Payment shall not be made on a cheque which bears more than one special crossing, unless the crossings are in favour of more than one banker, where it is specially crossed in the name of an agent for collection. 87. Payment in Due Course of Crossed Cheque: If a banker pays a crossed cheque drawn on him in due course, the rights and liabilities of the paying banker and the drawer shall be the same as they would be if payment had been made to the true owner of the cheque. 88. Payment of Crossed Cheque not in Due Course: If a banker pays a crossed cheque without complying with the formalities of sections 84 and 85, the paying banker shall be liable for any loss or damage caused to the true owner of the cheque by reason of such payment. 89. Cheque marked "Not Negotiable": A person taking a cheque crossed generally or specially bearing the words "not negotiable" shall not have, and shall not be capable of giving, a better title to the cheque than that which the person from whom he took it had. 90. Bank Not Liable for Receiving Payment: If a bank, in good faith and without negligence, receives payment of a crossed cheque for a customer, the bank shall not be liable to the true owner of the cheque merely by reason of having received payment thereof, even if it is subsequently proved that the customer had no title to the cheque. 91. Provisions of this Chapter to Apply to Drafts: The provisions of this Chapter shall apply to drafts in the same manner as they apply to cheques. Chapter-9
Miscellaneous

92. Acceptance for Honour: When a bill of exchange has been noted or protested for non-acceptance or for better security, any person, not being a party liable on the bill, may, with the consent of the holder, accept it for the honour of any party to the bill. 93.
Negotiable Instruments Act, 1977

Acceptance for Honour: When a bill of exchange has been noted or protested for non-acceptance or for better security, any person, not being a party liable on the bill, may, with the consent of the holder, accept it for the honour of any party to the bill. 93. Manner of Acceptance for Honour: A person desiring to accept a bill for honour must, by his signature, write on the bill that he accepts for the honour of the drawer or a specified endorser, and sign it. If no such name is mentioned, it is deemed to be accepted for the honour of the drawer. 94. Liability of Acceptor for Honour: (1) If the drawee fails to pay the bill, the acceptor for honour shall be liable to all parties subsequent to the party for whose honour he accepted. The acceptor for honour shall be entitled to recover any expenses incurred or loss suffered by him from the party for whose honour he accepted or prior parties. Provided that the acceptor for honour shall not be liable on the bill if the instrument is not presented to him. (2) The acceptor for honour shall be liable only if, upon presentation to the drawee for payment after maturity, the drawee refuses to pay, and this fact is certified by a Notary Public. 95. Payment for Honour: (1) When a bill of exchange has been protested for non-payment, any person may pay it for the honour of any person liable thereon. Provided that before making such payment, he or his agent must cause a declaration of payment for the honour of a specified person to be recorded in the Notary Public's register. (2) Upon payment under sub-section (1), the paying party acquires all the rights of the holder and may recover the amount paid, with interest and all expenses incurred, from the person for whose honour payment was made. 96. Dishonour Deemed not Occured until Alternative Drawee Dishonours: Where the name of an alternative drawee is mentioned in a bill of exchange or its endorsement, the bill shall not be deemed to be dishonoured until the alternative drawee has dishonoured it. 97. Acceptance and Payment Valid without Prior Protest: An alternative drawee may accept and pay the bill of exchange even if it has not been previously protested by a Notary Public. 98. Bills in Sets: A single bill of exchange may be drawn in several parts. Each part shall be numbered and contain a condition that it is payable only so long as the other part remains unpaid. All parts together constitute one set and the whole set is considered one bill of exchange. Once acceptance or payment is made
International Development Association Membership Act, 1962

Act to Obtain Membership of the International Development Association, 2019

Royal Seal and Date of Publication
2019.6.18

Amending Acts

1. Nepal Acts Amendment, Repeal and Re-enactment Act, 2019 2019.2.30
2. Republic Strengthening and Some Nepal Laws Amendment Act, 2066 2066.10.7
3. Act to Amend Some Nepal Acts to Make Them Consistent with the Constitution of Nepal, 2075 2075.1.19

Act No. 24 of the year 2019

An Act made for the purpose of enabling Nepal to become a member of the International Development Association by accepting the international agreements for the establishment and operation of the International Development Association. Preamble: Whereas the International Development Association has prescribed conditions under which Nepal may be admitted to membership of the International Development Association, as specified in Schedule-1 of this Act; and

Whereas it is necessary to make provisions for the matters written hereinafter in order to fulfill the conditions as written above,

The Federal Parliament has enacted this Act. This Act is made by His Majesty King Mahendra Bir Bikram Shah Dev in accordance with Article 93 of the Constitution of Nepal as amended by the Nepal Acts Amendment, Repeal and Re-enactment Act, 2019. 1. Short Title and Commencement: (1) This Act may be called the “Act to Obtain Membership of the International Development Association, 2019”.

(2) This Act shall come into force immediately. 2. Definition: Unless the subject or context otherwise requires, in this Act,-

(a) “Association” means the International Development Association.

(b) “Association Agreement” means the Articles of Agreement of the Association. 3. Power to Make Agreements and Deposit Instruments of Acceptance: as amended by the Act to Amend Some Nepal Acts to Make Them Consistent with the Constitution of Nepal, 2075.The Finance Minister of the Government of Nepal may, by executing a document under his/her signature, authorize the person specified in that document to do the following on behalf of the Government of Nepal:-

(a) To sign the Articles of Agreement of the International Development Association.

(b) To deposit with the International Bank for Reconstruction and Development an instrument of acceptance of the Association Agreement, stating that the Government of Nepal has accepted, in accordance with the laws of Nepal, the relevant agreements and the conditions specified therein on which Nepal will be granted membership of the International Development Association. 4.
International Development Association Membership Act, 1962

4. Power to Make Payments to the Association: The Finance Minister of His Majesty shall have the authority to make payments from the as amended by the Act to Amend Some Nepal Acts to Make Them Consistent with the Constitution of Nepal, 2075.Federal Consolidated Fund of such amounts as may from time to time become payable to the Association on behalf of the Government of Nepal under the conditions set forth in Schedule-1 and the Association Agreement. 5. Power to Issue Promissory Notes: The Finance Minister may, on behalf of the Government of Nepal, create and issue in the name of the Association non-interest-bearing and non-negotiable promissory notes or other obligations in such form as he/she deems appropriate, as described in Article 2, Section 2(e) of the Association Agreement according to Schedule 2, and payment of the promissory notes or obligations so created and issued shall be made from the as amended by the Act to Amend Some Nepal Acts to Make Them Consistent with the Constitution of Nepal, 2075.Federal Consolidated Fund. 6. Nepal Rastra Bank to be Designated as Depository: Nepal Rastra Bank is designated as the depository for the purposes of Article 6, Section 9 of the Association Agreement according to Schedule-3. 7. Medium of Communication: The Secretary of the Government of Nepal, Ministry of Finance, is designated as the medium of communication for the purposes of Article 6, Section 10 of the Association Agreement according to Schedule-4. 8. Status, Immunities and Privileges of the Association: Notwithstanding anything contained in the prevailing Nepal law, the Association shall enjoy the status, immunities and privileges as set forth in Article 8 of the Association Agreement according to Schedule-5. 9. Power to Amend Schedules: If any amendment is made to any matter contained in the Schedules of this Act relating to the Association Agreement, the Government of Nepal may, by publishing a notice in the Nepal Gazette from time to time accordingly, amend the Schedules of this Act. 10. Power to Make Rules: The Government of Nepal may make rules for the purpose of implementing this Act. 12. Schedule-1

International Development Association

Proposal No.
International Development Association Membership Act, 1962

10. Power to Make Rules: The Government of Nepal may make rules for the purpose of implementing this Act. 12. Schedule-1

International Development Association

Proposal No. 15

Membership for Nepal

Whereas the Government of Nepal has applied for membership of the International Development Association under Article 2, Section 1(vi) (hereinafter referred to as the Article); and

Whereas the Executive Directors, in accordance with Section 9 of the By-Laws of the Association, have, after consultation with representatives of Nepal, submitted a recommendation to the Board of Governors regarding this application,

The Board of Governors hereby proposes to admit Nepal to membership of the Association on the following terms and conditions:-

(a) Except as expressly provided in this proposal, the terms and conditions upon which Nepal shall acquire membership of the Association shall be those set forth in the Articles (including, without intent of limitation, conditions relating to payment of subscriptions, use of currency and voting rights) as specified for initial members in Part II of Schedule (A) to the Articles.

(b) Nepal shall subscribe to a total value equivalent to US $500,000, calculated in terms of United States dollars of the weight and fineness in effect on January 1, 1960, as a contribution upon acceptance of membership of the Association.

(c) Prior to acceptance of membership of the Association, Nepal shall pay all amounts of the initial subscription payable by a member of the Association on the date of acceptance of membership or earlier, in the same manner as initial members referred to in Part II of Schedule (A) to the Articles.

(d) Nepal may accept membership of the Association under this proposal on or before November 5, 1962; provided that the Executive Directors may extend such period if they find that due to exceptional circumstances a further extension of the period for accepting membership under this proposal is necessary.
International Development Association Membership Act, 1962

Schedule-2

Article 2, Section 2(e) of the Articles of Agreement of the International Development Association

Section 2(e) - The Association shall accept from any member, in lieu of any part of the member's currency paid or payable by the member which the Association determines is not needed for its operations, non-interest-bearing and non-negotiable notes or similar obligations of the member, or of the depository designated by the member, which shall be payable on demand to the Association at its designated depository and in the currency of the member, provided that the value of the currency is maintained in accordance with paragraph (d) of this Section or Article 4, Section 2, as the case may be:-

(a) If the Association determines that the par value of the currency of a member state has been reduced or that the foreign exchange value of the currency of a member state has depreciated significantly within the territory of that member, the member state shall pay to the Association within a reasonable time additional currency of its own sufficient to maintain the value of the currency paid by the member state to the Association under Article 2, Section 2(d) as at the time of such payment. The foregoing shall apply only to currency, whether in the form of notes accepted under Article 2, Section 2(e) or otherwise, until it is paid out or exchanged for the currency of another member.

(b) If the Association determines that the par value of the currency of a member state has been increased or that the foreign exchange value of the currency of a member state has appreciated significantly within the territory of that member, the Association shall pay to that member state within a reasonable time currency of the member equivalent to the increase in value, applying the rule in the Annex to this Section.

(c) The Association may apply the rule in the foregoing Annexes if the International Monetary Fund changes the par values of the currencies of all members in uniform proportion.

(d) Amounts paid under paragraph (a) of this Section to maintain the value of a currency shall be convertible and usable in that same currency. Schedule-3

Article 6, Section 9 of the Articles of Agreement

9. Depositories: Each member country shall designate its central bank as a depository for the currency of that member held by the Association or for other assets of the Association, or if it has no central bank, it shall designate such other institution as may be acceptable to the Association. In the absence of a separate designation, the depository designated for the Bank shall be the depository for the Association.
International Development Association Membership Act, 1962

In the absence of a separate designation, the depository designated for the Bank shall be the depository for the Association. Schedule-4

Article 6, Section 10 of the Articles of Agreement

10. Medium of Communication: Each member country shall designate an appropriate official as the medium for communication in connection with any matter arising under this Agreement, through which the Association shall correspond. In the absence of a separate designation, the official designated for the Bank shall be considered the medium of communication for the Association. Schedule-5

Article 8 of the Articles of Agreement

Status, Immunities and Privileges

9. Section 1 - Purposes of Article: To enable the Association to fulfill the functions with which it is entrusted, the status, immunities and privileges set forth in this Article shall be accorded to the Association in the territory of each member. 2. Status of the Association: The Association shall possess full juridical personality and in particular, the capacity:-

(1) to contract;
(2) to acquire and dispose of immovable and movable property;
(3) to institute legal proceedings. 3. Position of the Association with regard to Judicial Process: Actions may be brought against the Association only in a court of competent jurisdiction in the territory of a member in which the Association has an office, has appointed an agent for the purpose of accepting service of process, or has issued or guaranteed securities. No action shall be brought by members or persons acting for or deriving claims from members. The property and assets of the Association shall, wheresoever located and by whomsoever held, be immune from all forms of seizure, attachment or execution before the delivery of final judgment against the Association. 4. Immunity of Assets from Seizure: The property and assets of the Association, wheresoever located and by whomsoever held, shall be immune from search, requisition, confiscation, expropriation or any other form of seizure by executive or legislative action. 5. Immunity of Archives: The archives of the Association shall be inviolable. 6. Freedom of Assets from Restrictions: To the extent necessary to carry out the operations provided for in this Agreement and subject to the provisions of this Agreement, all property and assets of the Association shall be free from restrictions, regulations, controls and moratoria of any nature. 7. Privilege for Communications: The official communications of the Association shall be accorded by each member the same treatment that it accords to the official communications of other members. 8.
International Development Association Membership Act, 1962

7. Privilege for Communications: The official communications of the Association shall be accorded by each member the same treatment that it accords to the official communications of other members. 8. Immunities and Privileges of Officers and Employees: All Governors, Executive Directors, Alternates, officers and employees of the Association shall:

(1) Be immune from legal process with respect to acts performed by them in their official capacity except when the Association waives this immunity;

(2) Not be local nationals, they shall be accorded the same immunities from immigration restrictions, alien registration requirements, national service obligations and the same facilities as regards exchange restrictions as are accorded by members to the representatives, officials and employees of comparable rank of other members;

(3) Be accorded the same travelling facilities as are accorded by members to representatives, officials and employees of comparable rank of other members. 9. Immunity from Taxation:

(a) The Association, its assets, property, income and its operations and transactions authorized by this Agreement shall be immune from all taxation and from all customs duties. The Association shall also be immune from liability for the collection or payment of any tax or duty.

(b) No tax shall be levied on any salary or emolument paid by the Association to Executive Directors, Alternates, officials or employees of the Association who are not local citizens, local subjects, or other local nationals.

(c) No taxation of any kind shall be levied on any obligation or security (including any dividend or interest thereon) issued by the Association, by whomsoever held:-

(1) If it discriminates against such obligation or security solely because it is created by the Association; or

(2) If the sole jurisdictional basis for such taxation is the place or currency in which it is issued, made payable or paid, or the location of any office or place of business maintained by the Association.

(d) No taxation of any kind shall be levied on any obligation or security (including any dividend or interest thereon) guaranteed by the Association, by whomsoever held:-

(1) If it discriminates against such obligation or security solely because it is guaranteed by the Association; or

(2) If the sole jurisdictional basis for such taxation is the location of any office or place of business maintained by the Association. 10. Application of Article: Each member shall take such action as is necessary in its territory for the purpose of giving effect to the principles set forth in this Article and shall inform the Association of the detailed action which it has taken.
Financial Intermediary Institutions Act, 1998

Act on Institutions Engaged in Financial Intermediation, 2055 (1998)

Seal and Publication Date
2054.12.17

Amending Acts

1. Act on Institutions Engaged in Financial Intermediation
(First Amendment) Act, 2058 (2001) 2059.4.22

2. Republic Strengthening and Amendment of Certain Nepal Acts
Act, 2066 (2009) 2066.1.07

3. Act to Amend Certain Nepal Acts to Make Them Consistent with the Constitution of Nepal
Act, 2075 (2018) 2075.11.19

Act No. 29 of the year 2054 (1998)

An Act Made to Provide for the Institutions Engaged in Financial Intermediation

Preamble: Whereas it is expedient to make provisions relating to institutions engaged in financial intermediation to collect Amended by the First Amendment.micro-savings institutionally and to provide micro-credit to low-income persons residing in various parts of the country by engaging them in Amended by the First Amendment.micro-enterprises to improve their economic condition,

Now, therefore, the Parliament has enacted this Act in the twenty-eighth year of the reign of His Majesty King Birendra Bir Bikram Shah Dev. Chapter - 1

Preliminary

1. Short Title and Commencement: (1) This Act may be called the "Act on Institutions Engaged in Financial Intermediation, 2054 (1998)".

(2) This Act shall commence on the date appointed by the Government of Nepal by a notification published in the Nepal Gazette. 2.
Financial Intermediary Institutions Act, 1998

Chapter - 1

Preliminary

1. Short Title and Commencement: (1) This Act may be called the "Act on Institutions Engaged in Financial Intermediation, 2054 (1998)".

(2) This Act shall commence on the date appointed by the Government of Nepal by a notification published in the Nepal Gazette. 2. Definitions: Unless the subject or context otherwise requires, in this Act,-

(a) "Financial Intermediation" means the work of collecting Added by the First Amendment.micro-savings and providing micro-credit pursuant to this Act.

(b) Amended by the First Amendment."Institution" means an institution registered under the Institution Registration Act, 2034 (1977) and having obtained a license to engage in financial intermediation pursuant to this Act.

(c) "License" means a license granted under Section 5 to engage in financial intermediation.

(d) "Bank" means Nepal Rastra Bank established under the Nepal Rastra Bank Act, 2058 (2002).

(e) Amended by the First Amendment."Micro-enterprise" means an income-generating business carried on with less than ten persons engaged in its operation.

(f) "Low-income Person" means a person whose income is less than that prescribed by the Bank from time to time.

(g) "Group" means a group of low-income persons formed after completing the process as prescribed.

(h) "Collective Guarantee" means a deed of guarantee written to the Institution by the other members of a group, agreeing to collectively repay the micro-credit taken by a member of that group if such member fails to repay it.

(i) Added by the First Amendment."Micro-savings" means savings amounts collected by the Institution from low-income persons who are members of the Institution or from groups of such persons, as prescribed by the Bank from time to time.

(j) Amended by the First Amendment."Micro-credit" means credit provided by the Institution to operate a micro-enterprise, up to the limits prescribed by the Bank from time to time.

(k) "Borrower" means a group or any member of a group taking micro-credit from the Institution.

(l) "Collateral" means movable or immovable property for which a deed of mortgage, pledge, or any other type of instrument has been executed under the prevailing law when taking micro-credit.

(m) "Employee" means a person appointed by the Institution to work, whether with or without remuneration, and the term shall also include the office-bearer of the Institution.

(n) "Prescribed" or "as prescribed" means prescribed or as prescribed by rules or regulations made under this Act. Chapter - 2

Provisions Relating to License

3. Not to Engage in Financial Intermediation Without License: After the commencement of this Act, no person shall engage or cause to engage in financial intermediation Added by the First Amendment.pursuant to this Act without obtaining a license. 4.
Financial Intermediary Institutions Act, 1998

Chapter - 2

Provisions Relating to License

3. Not to Engage in Financial Intermediation Without License: After the commencement of this Act, no person shall engage or cause to engage in financial intermediation Added by the First Amendment.pursuant to this Act without obtaining a license. 4. Application to be Submitted for License: If an institution registered under the Institution Registration Act, 2034 (1977) with the objective of engaging in financial intermediation wishes to engage in financial intermediation pursuant to this Act, it shall submit an application to the Bank in the prescribed format stating the following details:-

(a) Certificate of registration of the institution and the charter of the institution,
(b) Names, addresses, and occupations of the office-bearers of the institution,
(c) Total number of members of the institution,
(d) Movable and immovable property of the institution,
(e) Geographical area in which the institution wishes to engage in financial intermediation,
(f) Other matters as prescribed. 5. License to be Granted: (1) Upon receipt of an application under Section 4, the Bank shall conduct necessary inquiries into such application, and if it appears necessary to obtain further information or details during such inquiry, the Bank may call for further information or details from the institution submitting such application.

(2) If, after conducting inquiries under subsection (1), the Bank deems it appropriate to grant a license, it shall collect the prescribed fee and grant a license to the applicant in the prescribed format to engage in financial intermediation.

(3) When granting a license under subsection (2) Added by the First Amendment.or informing of rejection, it shall be done within Amended by the First Amendment.a maximum of seventy-five days from the date of receipt of the application or, if further information or details were called for under subsection (1), from the date of receipt of such information or details.

(4) Deleted by the First Amendment. 6. Conditions may be Prescribed: (1) The Bank may, while granting a license under Section 5, prescribe conditions to be complied with by the Institution while engaging in financial intermediation.

(2) It shall be the duty of the Institution to comply with the conditions prescribed under subsection (1). 7. License to be Renewed: Added by the First Amendment.(1) The Institution shall have the license renewed from the Bank every two years as prescribed.

(2) If the license is not renewed within the period under subsection (1), such license shall be automatically cancelled.

(3) Other provisions relating to license renewal shall be as prescribed. Chapter - 3

Work, Duties, and Powers of the Institution

8.
Financial Intermediary Institutions Act, 1998

Chapter - 3

Work, Duties, and Powers of the Institution

8. Work, Duties, and Powers of the Institution: In addition to the work, duties, and powers mentioned elsewhere in this Act, the work, duties, and powers of the Institution shall be as follows:-

(a) To encourage low-income persons to form groups,
(b) Added by the First Amendment.To collect micro-savings from groups or group members,
(c) To provide micro-credit to groups or group members for operating micro-enterprises, with or without taking any movable or immovable property as collateral or guarantee,
(d) Added by the First Amendment.To obtain loans or grants from the Government of Nepal or the Bank or domestic or foreign associations, institutions, etc., and to utilize such loans or grants for the distribution of micro-credit or for making that work effective,
Amended by the First Amendment.Provided that, while obtaining loans, grants, or any assistance from foreign associations, institutions, etc., the Institution shall obtain the approval of the Government of Nepal through the Bank.
(e) To appraise the work for which the credit is requested before providing micro-credit and to identify whether such work is feasible,
(f) To publicize micro-enterprises of a type that will improve the economic condition of low-income persons,
(g) To conduct workshops regarding micro-enterprises, provide training for project formulation, provide assistance, impart technical knowledge, and arrange technical assistance as required,
(h) Added by the First Amendment.To provide necessary services to the group regarding the mobilization of micro-savings and micro-credit,
(i) To take necessary action for the timely recovery of micro-credit,
(j) To conduct inspections from time to time regarding whether the micro-credit has been properly utilized, and if proper utilization is not found during inspection, to give necessary directions Added by the First Amendment.or take necessary action,
(k) Added by the First Amendment.To perform other work as prescribed regarding the collection of micro-savings and distribution of micro-credit,
Added by the First Amendment.(l) To act as an agent of commercial banks and financial institutions. 9. Bank may call for Details, Statistics, or Documents: The Bank may call for any details, statistics, or documents Added by the First Amendment.related to micro-savings and micro-credit from the Institution, and it shall be the duty of the concerned Institution to submit the details, statistics, or documents so called for. 10.
Financial Intermediary Institutions Act, 1998

10. Agreement to be Made: (1) While providing micro-credit, the Institution shall make a written agreement with the borrower including conditions as necessary for the collateral and proper utilization of such credit.

(2) While making an agreement under subsection (1), the Institution may prescribe conditions such as fixing any repayment period, requiring repayment of principal and interest in case of breach of conditions set by the Institution, or enabling recovery from the collateral or collective guarantee executed by the borrower. Provided that while taking collateral from a borrower, the Institution shall not take collateral from a person unrelated to the group. 11. Rights of the Institution in Case of Breach of Condition: (1) If any borrower fails to comply with the agreement or conditions made with the Institution, or does not repay the Institution's micro-credit within the period stipulated in the deed, or if upon inspection by the Institution the amount taken as micro-credit is found to have been misused or embezzled, then, notwithstanding anything contained in the prevailing law, the Institution may auction sell the collateral executed to or kept with the Institution by the borrower under the prevailing law and recover the principal and interest.

(2) If a borrower transfers the right over the collateral kept with the Institution to any other person in any manner, or if the value of the collateral kept with the Institution diminishes for any reason, then, notwithstanding anything contained in the prevailing law, the Institution may require the borrower to keep additional collateral covering the credit amount within a period prescribed by the Institution. If the borrower fails to keep such collateral within the period prescribed by the Institution, the Institution may recover its principal and interest by auction selling from the property held as collateral.

(3) If, upon recovery by auction sale under subsection (1) or (2), the full amount of the Institution's principal and interest cannot be recovered from such collateral, the Institution may recover by auction sale from the other assets of that member, in case a member has taken individual micro-credit, or from the other assets of the members of such group, in case micro-credit has been taken collectively.

(4) Out of the amount recovered by auction sale under this section, after deducting the expenses incurred in the auction sale of the property and the amount of the Institution's principal and interest, the remaining amount shall be returned to the concerned Amended by the First Amendment.person.

(5) If no one accepts the property upon auction sale by the Institution under this section, the Institution may itself accept such property Added by the First Amendment.as prescribed. 12.
Financial Intermediary Institutions Act, 1998

12. Registration or Entry to be Provided: (1) When a property held as collateral is auction sold under Section 11, if any person accepts the auction, the Institution shall send a letter to the concerned Land Revenue Office for registration or entry of such property in the name of such person under the prevailing law, and if no person accepts the auction and the Institution accepts it, for registration or entry in the name of the Institution.

(2) Upon receipt of a letter from the Institution under subsection (1), the concerned Land Revenue Office shall provide registration or entry. 13. Deleted by the First Amendment

14. Determination of Interest Rate: Amended by the First Amendment.(1) The Institution shall itself determine the interest rate to be paid and received on micro-savings and micro-credit, subject to the policies and directives of the Nepal Rastra Bank. The Institution shall provide information of such determination of interest rate to the Bank within seven days.

(2) Notwithstanding anything contained in subsection (1), the Bank may, if it deems necessary, direct the Institution to increase or decrease the interest rate determined by the Institution, and it shall be the duty of the concerned Institution to comply with such directive. 15. Service Fee may be Charged: The Institution may charge a service fee for providing any service, facility, technical knowledge, or training to any person or group regarding the mobilization of micro-savings and micro-credit, Deleted by the First Amendment

16. Records to be Maintained: The Institution shall maintain updated records of its work relating to financial intermediation. Chapter - 4
Work, Duties, and Powers of the Bank

17. Inspection or Investigation may be Conducted or Caused: (1) The Bank may conduct or cause to be conducted inspections or investigations of the office or work operations of the Institution as necessary.

(2) It shall be the duty of the concerned Added by the First Amendment.Institution and its employees to provide the documents or details requested by the person conducting such inspection or investigation under subsection (1).

(3) Other provisions relating to inspection or investigation shall be as prescribed. 18.
Financial Intermediary Institutions Act, 1998

18. Directions may be Issued: (1) If, in the course of inspection or investigation under Section 17, the Institution is found to have done any of the following acts, the Bank may, fixing a specific time, direct the Institution to rectify any of its acts or to make specific arrangements regarding its operations:-

(a) Failure to perform acts required to be done under this Act,
(b) Added by the First Amendment.Doing any act detrimental to savers or borrowers,
(c) Books, accounts, or documents found not properly maintained,
(d) Failure to comply with the conditions prescribed or directives given by the Bank,
(e) Embezzlement of the Institution's funds or Added by the First Amendment.utilization of received funds for purposes contrary to the objective of this Act,
(f) Failure to provide details, statistics, or documents called for under this Act.

(2) The Bank may issue directives from time to time to the Institution regarding matters that the Institution is required to do under this Act or the rules made under this Act, and it shall be the duty of the concerned Institution to comply with such directives. 19. License may be Cancelled: Amended by the First Amendment.(1) If any Institution violates a directive given under Section 18, the Bank may warn it to rectify or place restrictions on any activity of such Institution. If such directive is violated three times, or if the Institution does any of the following acts, the Bank may suspend or cancel the license of such Institution:-

(a) If it ceases to engage in financial intermediation,
(b) If it embezzles the Institution's funds or does not utilize funds for the purpose for which they were received,
(c) If, after having been directed by the Bank within a specified time to rectify any act or to make specific arrangements, it fails to act accordingly,
Added by the First Amendment.(d) If it fails to get the Institution registered under the Institution Registration Act, 2034 (1977) and renewed under Section 7 of this Act.

(2) Prior to issuing an order to cancel the license under subsection (1), the Bank may, if it deems necessary, cause necessary inspection or investigation regarding the matter.

(3) Prior to cancelling the license under subsection (1), the Bank shall provide the concerned Institution an opportunity to submit an explanation. 20. May Prohibit Engaging in Financial Intermediation: If, due to any act under Section 18 by an Institution, it appears inappropriate to allow such Institution to continue engaging in financial intermediation in its current state, the Bank may, after providing the Institution an opportunity to make necessary rectification, prohibit it from engaging in financial intermediation for a specified period. Amended by the First Amendment.21.
Financial Intermediary Institutions Act, 1998

Amended by the First Amendment.21. May Grant Leave from Financial Intermediation: If an Institution applies to the Bank to be relieved from engaging in financial intermediation, and if it appears that such Institution has settled all payable liabilities, the Bank may grant such Institution leave from engaging in financial intermediation. Provided that if such Institution is unable to settle all liabilities, the Bank shall prohibit such Institution from engaging in work related to financial intermediation and send a letter to the Government of Nepal to have the liabilities paid from the assets of such Institution under the Institution Registration Act, 2034 (1977). Added by the First Amendment.21A. Recovery from Personal and Family Assets of Office-bearer: If any office-bearer of the Institution engages in or causes to engage in financial intermediation activities in a manner contrary to personal interest or the objective of this Act and with mala fide intent, or embezzles the Institution's funds, the Bank shall recover the amount so embezzled from the movable and immovable property of such office-bearer and his family Deleted by the Republic Strengthening and Amendment of Certain Nepal Acts Act, 2066 (2009). located in Nepal. 22. Deleted by the First Amendment. 23. Deleted by the First Amendment. Chapter-5

Fund, Accounts, and Audit of the Institution

24. Amended by the First Amendment.Fund of the Institution: (1) Amended by the First Amendment.There shall be a separate fund of the Institution, and the following amounts shall be deposited in such fund:-

(a) Amended by the Act to Amend Certain Nepal Acts to Make Them Consistent with the Constitution of Nepal, 2075 (2018).Amounts received as grants or loans from the Government of Nepal, Added by the First Amendment.Provincial Government, or the Bank or domestic or foreign associations, institutions, etc.,
Added by the First Amendment.(a1) Amounts received by collecting micro-savings,
Added by the First Amendment.(a2) Amounts received from commercial banks or financial institutions.
(b) Amounts as prescribed out of the fees received from members of the Institution,
(c) Amounts received as service fees for services provided by the Institution,
(d) Amounts received as interest, fees, etc., from micro-credit,
(e) Amounts received from other sources.

(2) All expenses incurred in the name of the Institution shall be borne out of the fund under subsection (1). Added by the First Amendment.Provided that amounts collected from micro-savings and amounts received for micro-credit shall not be spent for other purposes. Amended by the First Amendment.(3) The amount of the fund shall be deposited by opening an account in any commercial bank or financial institution, and the operation of such account shall be as prescribed.
Financial Intermediary Institutions Act, 1998

Amended by the First Amendment.(3) The amount of the fund shall be deposited by opening an account in any commercial bank or financial institution, and the operation of such account shall be as prescribed. Added by the First Amendment.(4) If the Institution does not have the immediate capacity to disburse micro-credit, it may, with the approval of the Bank, invest in a fixed deposit for a maximum period of up to six months. 25. Risk Bearing Fund: (1) The Institution shall, in addition to the fund mentioned in Section 24, establish a separate risk bearing fund for the purpose of bearing potential losses arising from the provision of micro-credit, and shall deposit in such fund, by the last day of each fiscal year, an amount equal to the prescribed percentage of the total outstanding credit amount remaining invested.

(2) The amount deposited in the fund under subsection (1) may be invested by the Institution in securities of the Government of Nepal or the Bank Added by the First Amendment.or in fixed deposits of commercial banks or financial institutions.

(3) The amount deposited in the fund under subsection (1) shall be used only for the purpose of writing off micro-credit. If micro-credit is required to be written off accordingly, the Institution shall obtain the approval of the Bank. 26. Accounts and Audit of the Institution: (1) The Institution shall keep separate accounts for its work relating to financial intermediation, and shall prepare a balance sheet for each fiscal year and have it audited by a Amended by the First Amendment.recognized auditor appointed by the general meeting of the Institution within six months of the end of such fiscal year.

(2) While appointing an auditor under subsection (1), the same person or firm shall not be appointed for more than three consecutive times.

(3) The remuneration of the auditor shall be as prescribed by the general meeting of the Institution.

(4) The Bank may, if it wishes, examine or cause to examine the books of accounts of the Institution at any time. 27. Deleted by the First Amendment. Chapter-6

Penalties

28. Penalties: (1) If any person engages in financial intermediation without obtaining a license under this Act, such person shall be liable to a fine of up to twenty thousand rupees or imprisonment for up to six months or both.