Chapter-14 Miscellaneous

 

107. Special Provisions Relating to Infrastructure Development Bank: (1) The Rastra Bank may formulate a separate special policy or issue directives accordingly concerning the establishment, operation, regulation, supervision, merger and acquisitions or liquidation of Infrastructure Development Banks based on the nature, volume and investment made in respective Infrastructure Development Banks.

2. Notwithstanding anything contained elsewhere in this Act, the maximum limit of shares to be subscribed by a promoter or shareholder of an Infrastructure Development Bank or limit of equity investment to be made by any foreign bank, financial institution and other corporate body in shares, debentures or other financial instruments shall be as determined by the Rastra Bank from time to time.

108. Security of Deposits to be made: A licensed bank and financial institution shall be required to make security of the amount remained in deposit account in accordance with the provisions of the prevailing law as specified by the Rastra Bank.

109. Banking Secrecy to be Maintained: (1) The relationship between a bank or financial institution and its customers and information pertaining to his or her accounts, records, books, ledgers and statements shall not be disclosed to any person other than the concerned person.

2. Notwithstanding anything contained in Sub-Section (1), secrecy shall not be deemed to have been violated, if the details or information of any person remained in a bank or financial institution is provided in following manner: –

a. If the details or information provided to the Rastra Bank pursuant to this Act or Rastra Bank Act or the Rules or Byelaws framed thereunder or the orders or directives issued thereunder or if the details or information is shared between banks or financial institutions in the course of exchanging credit information,

b. If the details or information is provided to the court in connection with any litigation or any other legal action,

c. If such notice or information is provided to any Committee of Inquiry carrying out investigations or prosecution, or inquiry according to the prevailing laws or to any other competent person authorized by the prevailing laws, or such information is provided to any regulatory entity.

d. If any detail or information is provided to an auditor in the course of auditing,

e. If any detail or information is provided to a foreign country in accordance with the prevailing laws relating to mutual legal assistance,

f. If, in the course of investigation of any case of a specific nature, the Government of Nepal, Ministry of Finance, has made a request, accompanied by the reason therefor, for providing any details of the account of any person, firm, company or institution maintained with the bank or financial institution, and if the Rastra Bank has given direction according for the same.

3. No one shall disclose or cause to be disclosed any information or details received under Sub – Section (2) to any unauthorized person.

4. Except in the circumstance as referred in Sub-Section (2), the Director, Chief Executive, office bearer, employee, auditor, advisor of a bank or financial institution or any other relevant person shall not disclose or cause to be disclosed the secrecy of the accounts, records, books, ledgers and any other information of the bank or financial institution the secrecy of which is required to be maintained in such a manner as to undermine the relationship between the bank or financial institution and its customers.

110. Power to Give Directive to Freeze Accounts: (1) The Rastra Bank may, in the following circumstances, give directive to a bank or financial institution at any time to freeze any account not allowing any type of payment to be made to or transfer of fund in the name of, any person, firm, company or institution:-

a. In cases where a request has been made by a competent authority to the Rastra Bank in the course of investigation of any offence,

b. In order to maintain national interests by preventing money laundering and financing in terrorism and prevention of corruption, organized crime or controlling commission of possible offence in the transaction of bank and financial institution.

2. It shall be the duty of the concerned bank or financial institution to comply with the directive given by the Rastra Bank pursuant to Sub-Section (1).

111. Right to Make Claims over the Deposits: (1) No claims of any person other than the actual depositors over the deposits made with a licensed bank or institution shall be entertained.

2. In the event of the death of a depositor, a nominee appointed by him/ her, if any, and if such nominee also dies or if no nominee has been appointed by the depositor, the surviving person from amongst his/her relatives, in the following order of priority, shall have right to such deposits in the first place: –

a. The husband or wife living in the joint family,

b. The son or daughter, or adopted son or adopted daughter or widow daughter-in-law, living in the joint family,

c. The father, mother, grandson or granddaughter living in the joint family,

d. The husband or wife, son, daughter, father or mother, son, daughter-in-law or married daughter living separately,

e. The grandfather, grandmother, brother, nephew, niece, sister living in the joint family, the grandfather or grandmother living separately,

f. The step mother living in the joint family, and grandson and unmarried granddaughter of the son living separately,

g. The elder or younger brother living separately and nephew, niece, sister, nephew, niece

h. The uncle, widowed aunt, sister-in-law (elder or younger brother’s wife), or grand-daughter-in-law living in the joint family,

i. Married sisters, grand-daughter-in-law living separately.

(3) If there is no one in the order of priority as referred to in Sub-Section (2), and as such a situation has arises where a rightful successor according to the prevailing laws has not made any claim over the deposit, the deposit(s) shall be deposited  in the Banking Development Fund of the Rastra Bank and be used for banking development.

4. Notwithstanding anything contained in the prevailing laws, no amount deposited with a bank or financial institution shall be handed over to anyone without the approval of the person who has the title thereto under Sub-Section (1).

112. Statement of Unclaimed Deposits: (1) A bank or financial institution shall, within the first month of each fiscal year, submit to the Rastra Bank statements of any deposit accounts which have remained dormant for the last ten years, and of those which have not been claimed under this Act.

2. A bank or financial institution shall publish a notice to collect the unclaimed deposits as referred to in Sub-Section (1) once in every five years in a national level daily newspaper. Details description thereof shall also be posted by the bank or financial institution on its website.

3. In cases where the amount as referred to in Sub-Section (1) is not collected within a period of twenty years, such deposit shall be collected to the Banking Development Fund of the Rastra Bank and be used for banking development.

113. Recovery from or confiscation of deposits: In cases where any credit has been distributed or transaction has been carried out by pledging as collateral or security the amount deposited with a bank or financial institution, or if amounts are deposited with a bank or financial institution with misappropriated funds belonging to the Governmental of Nepal or any entity owned by the Government of Nepal, or with funds obtained by committing any act which is deemed to be an offense under the prevailing laws, or with funds collected by carrying out any activity relating to terrorism or committing banking or financial offence or organized crime, such deposits may be confiscated or such collateral or security or misappropriated or other funds may be recovered from such deposits or such deposit may be confiscated in accordance with the prevailing laws.

114. Recovery from Director: If any Director is found to have taken any cash or kind for personal benefit in the course of transaction of a bank or financial institution, the bank or financial institution shall recover such cash or kind from such a Director.

115. Prohibition on Making Claims: If any person is found to have entered into any transaction with any Director or with his/her representative knowingly or having adequate reasons to believe that the Director has entered into the transaction for his/her personal interests or inflicting loss to a bank or financial institution, such a person may not make a claim against the bank or financial institution with regard to such transaction.

116. Government of Nepal to be a Plaintiff: (1) A case relating to offenses as referred to in Section 103 shall be filed with the Government of Nepal being the plaintiff, and such a case shall be deemed to have been included in Schedule 1 of the Government Cases Act in force.

2. Anyone may file a complaint in writing or verbally against any Director, office bearer, employee, borrower or any other person committing an offence referred to in Section 103 along with evidence thereof at the nearby police office. While filing such a complaint, it shall not be required to mention the name of the person filing the complaint.

3. The Rastra Bank shall extend the necessary cooperation in all acts such as inquiry of investigation, prosecution of the offences as referred to in Section 103.

117. Provisions Relating to Transparency: (1) A bank or financial institution or a branch of a foreign bank or financial institution shall be required to publish a periodic report on its financial position and status of risks in every three months for transparency of the transactions it has carried out.

2. The minimum matters to be included in the report as referred to in Sub-Section (1) shall be as specified by the Rastra Bank.

118. Provisions Relating to Protection of Customers’ Interests: The Rastra Bank may carry out the following functions for the purpose of protection of the interests of consumers:-

a. To ensure that a licensed bank or financial institution has been carrying out its financial transactions as per the prevailing laws and that they have been making available financial services to the consumers in a transparent and fair manner,

b. To make coordination on matters of protection of the interests of customers in the financial sector,

c. To collect the necessary information to introduce reform in matters of the protection of interests of consumers in the banking sector and to bring about financial literacy.

119. Exemption and facilities: (1) Any mortgage deed of movable or immovable assets to be concluded for credit not exceeding one million rupees supplied by a bank or financial institution to any citizen of Nepal or any institution established in accordance with the laws in force for agriculture, cottage and small-scale industry, irrigation, hydro-power generation and for any other enterprise as specified by the Government of Nepal shall not be required to make registration of such deed.

2. The maturity period of the credit and deposits shall be as fixed by the bank or financial institution.

3. No revenue stamp fee shall be charged on any kind of deeds or documents related with the bank or financial institution.

120. Expenditures Management: The Rastra Bank may issue the necessary directives with regard to preliminary, incorporation, administrative, commercial and managerial expenditure as well as other expenditures of a bank or financial institution.

121. Statement of Assets to be submitted: The Directors, office bearer and the Chief Executive of a bank or financial institution shall be required to submit a statement of the entire movable and immovable assets and liabilities in his/her name and in name of his/her family members within sixty days from the date of completion of every fiscal year to the concerned Bank and information thereof shall be given also to the Rastra Bank. While submitting such a statement, the source of such income shall also be mentioned.

122. Credit, Liabilities and Titles against the Collateral of Credit may be purchased or sold: Notwithstanding anything contained in be prevailing laws of Nepal and unless otherwise provided for in the agreement concerning credit, the title over the credit given by any bank or financial institution to any person or of the liability it has accepted and of the movable or immovable assets pledged as collateral may also be purchased or sold.

123. Settlement of Disputes: (1) In case of any dispute arising between banks or financial institutions, such a dispute shall be required to be settled in mutual consent.

2. In cases where a dispute could not be settled through mutual consent in accordance with Sub-Section (1), the Rastra Bank shall settle the dispute through mediation or other methods of disputes resolution under the prevailing laws.

(3) The decision made by the Rastra Bank pursuant to Sub-Section (2) shall be final.

124. Not to be liable for acts done in good faith: (1) The office bearer or employee of the Rastra Bank or of a bank or financial institution shall not be held individually or severally liable for any act carried out in good faith under this Act or the Rastra Bank Act or the Rules or Byelaws framed thereunder or the orders or directives issued thereunder.

2. If any kind of lawsuit is filed against the Rastra Bank, a bank or financial institution or an office bearer thereof in relation to any loss or damage caused or likely to be caused by any act carried out or supposed to be carried out in good faith in connection with the compliance with this Act or Rastra Bank Act or the Rules or Byelaws framed thereunder or the orders or directives issued thereunder, the concerned institution shall bear the expenses of such lawsuit:

Provided that if an act is committed out of enmity, negligence or malafide intention, the concerned person shall be liable and the Rastra Bank or a bank or finance institution shall not bear the expenses to be incurred on such matter.

125. Actions Taken not to be Invalid: No action taken by a Director or Board of Directors shall be void merely on the ground that any irregularity in appointment of the Director of a bank or financial institution or in formation of any committee had taken place or the position of a Director had fallen vacant.

126. Study Committee and Sub-committee may be formed: (1) The Rastra Bank may, in order to carry out overall study on the reform of banking and financial laws, credit recovery, stability of the financial sector, and timely reforms on the financial system and to submit a report, thereon, constitute an expert study committee comprising representatives and experts of the Rastra Bank, bank or financial institutions and concerned entities.

2. The Rastra Bank may, for the purpose of Sub-Section (1) constitute sub-committees as may be necessary.

3. The functions, duties, and facilities of the Study Committee as referred to in Sub-Section (1) or of the sub-committee as referred to in Sub-Section (2) shall be as specified by the Rastra Bank.

127. Taking Oath of Office: (1) Each Director, office bearer, Chief Executive or employee of a bank or financial institution shall, prior to assuming the duties of his or her office, take the oath of office and secrecy according to the format as referred to in the schedule.

2. The oath of office referred to in Sub-Section (1) shall be administered by the Rastra Bank to the Chairperson, by the Chairperson to other Directors and the Chief Executive and by the Chief Executive or official designated by him/her to other official and employees.

128. Amendment of Memorandum of Association and Articles of Association: Notwithstanding anything contained in prevailing laws, amendment to the Memorandum of Association and Articles of Association of a bank or financial institution shall not be effective unless approved by the Rastra Bank.

129. This Act to Prevailed: (1) Matters as referred to this Act or the Rules, Byelaws, working procedures or Orders or Directives issued under this Act, it shall be dealt with in accordance with such provisions and in other matters, it shall be dealt with according to the Rastra Bank Act and other prevailing laws.

2. Matters Relating to the regulation, inspection and supervision and settlement of a claim of the bank or financial institutions established under this Act shall be under the Rastra Bank Act.

130. Power to Remove Difficulties: (1) If any difficulty arises in connection with the enforcement of any provision of this Act, the Rastra Bank may, with the approval of the Government of Nepal, issue necessary orders to remove such difficulty.

2. While issuing an order for removing difficulty pursuant to Sub-Section (1), reasons and justification thereof shall also be specified.

131. Power to issue Order or Direction: The Rastra Bank may, subject to this Act or the Rules or Byelaws framed thereunder, issue an order or directive to a bank or financial institution as may be necessary.

132. Power to frame Rules, Byelaws: (1) The Rastra Bank may, in order to implement this Act, if it deems necessary, frame and enforce necessary Rules of Byelaws.

2. The Rules framed by the Rastra Bank pursuant to Sub-Section (1) shall commence only after approval by Government of Nepal.

133. Power to Frame Byelaws and Working Procedures: (1) The Board of Directors may, in order to carry out its institutional, administrative and business transactions in a systematic manner, with the approval of Nepal Rastra Bank, frame byelaws relating to any or all of the following matters subject to this Act and the terms and conditions, limitations and norms as prescribed by the Rastra Bank:-

a. On appointment, promotion, transfer, dismissal, remuneration, allowances, gratuity, pension, leave, code of conduct, discipline, and the terms and conditions of service and the formation of such a service,

b. On financial administration of the bank or financial institution,

c. On writing off of credits,

d. On other matters as prescribed by the Rastra Bank from time to time.

2. In addition to the matters referred to in Sub-Section (1), a bank or financial institution may frame working procedures on the following matters as may be necessary:-

a. On meeting of the Board of Directors and working procedures of the General Meeting,

b. On delegation of authority by the Board of Directors to any Director, Chief Executive, Office bearer or employee,

c. On the terms and conditions of a contract to be concluded on behalf of a bank or financial institution,

d. On procedures relating to the use of the seal of a bank or financial institutions,

e. On valuation of non-banking assets to be mortgaged at the time of disbursement of credits or at the time of auction,

f. On other business to be carried out by a bank or financial institution as per this Act,

g. On declassifying documents and papers,

h. On other matters as specified by the Rastra Bank, from time to time.

134. Repeal and Saving: (1) The Banks and Financial Institutions Act, 2063 (2006) is hereby repealed.

2. Acts carried out and actions taken according to the Act repealed pursuant to Sub-Section (1) shall be deemed to have been taken under this Act.