Chapter-12

Chapter-12

Miscellaneous

76. Permission to be obtained for voluntary liquidation :

(1) A licensed institution shall not voluntarily liquidate itself without obtaining prior approval of the Rastra Bank.
(2) If an application for voluntary liquidation is made by a licensed institution pursuant to Sub-section (1), the Rastra Bank may, if, upon making necessary inquiries, it is satisfied that the licensed institution is in a position to fully settle its loans and liabilities, give permission to the licensed institution to undergo voluntary liquidation, subject to the conditions prescribed by the Rastra Bank.

77. Order of priority in settlement of liabilities on liquidation of licensed institution : Notwithstanding anything contained in the laws in force, liabilities shall be settled according to the following order of priority in the course of carrying out liquidation or insolvency of a licensed institution in any manner:
(a) Expenses incurred in liquidation.
(b) Payments outstanding to depositors on saving accounts.
(c) Payments outstanding to depositors on fixed accounts.
(d) Payments outstanding to other depositors.
(e) Taxes, fees and other charges payable according to the laws in force.
(f) Credit obtained from the Rastra Bank.
(g) Salary, allowances, provident fund, gratuity and other amounts outstanding to employees.
(h) Other credits obtained by the licensed institution.
(i) Shareholders.

78. Arbitration/mediation: In the event of any dispute between the licensed institutions, the Rastra Bank shall arbitrate/mediate the same. A decision given by the Rastra Bank in respect of such arbitration/mediation shall be final.

79. Secrecy to be maintained :

(1) Notwithstanding anything contained in the laws in force, the relationship between a licensed institution and its customers and information pertaining to its 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), if such information is provided in any of the following circumstances, the secrecy shall not be deemed to have been violated:
(a) If it is provided to the Rastra Bank pursuant to the Nepal Rastra Bank Act, 2058 (2002) or this Act or the Rules or Bye-laws framed thereunder or the orders or directives issued thereunder;
(b) If it is provided to a court in connection with any lawsuit or any other legal action;
(c) If it is provided to the legally authorized official making inquiries and investigations or prosecution, in connection with such inquiries and investigations or prosecution;
(d) If it is provided to the auditor in connection with audit;
(e) If it is mentioned in the audit report by the auditor;
(f) If it is provided to the enquiry committee or the investigation officer authorized by the laws in force, in the course of enquiries;
(g) If banking information is exchanged between two or more countries on the basis of a bilateral or multilateral treaty;
(h) If it is provided in the course of exchanging credit between the licensed institutions;
(i) If, in the course of investigation of any case of specific nature, the Government of Nepal, Ministry of Finance, has made a request, accompanied by the reason therefor, for providing the details of the account of the licensed institution or any details of the account of any person, firm, company or institution maintained with the licensed institution, and if the Rastra Bank has given direction for the same.
(3) The Government of Nepal, court, Rastra Bank, enquiry committee, investigating or prosecuting official, auditor or inspector or any other person appointed under this Act shall not divulge the secrecy of any information or particulars received under Sub-section (2).
(4) The directors, chief executive, employees, auditor and advisors of a licensed institution shall not divulge the secrecy of the accounts, records, books, ledgers and any other information of the licensed institution the secrecy of which is required to be maintained in such a manner as to undermine the relationship between the licensed institution and its customers.

80. Power to give directive to freeze accounts :

(1)In the course of carrying out the investigation of any type of crime or maintaining the national interests by controlling national or international terrorist activities or organized crimes, the Rastra Bank may, at any time, give directive to a licensed institution to freeze any account opened with the licensed institution in the name of any person, firm, company or institution in such a manner as to prevent the withdrawal or transfer of funds in any way from that account.
(2) It shall be the duty of the concerned licensed institution to comply with the directive given by the Rastra Bank pursuant to Sub- section (1).

81. Claim or title to deposits :

(1) Claims of any person other than the actual depositor to deposits made with a licensed institution shall not be entertained. In the event of the death of the depositor, the person willed by him or her, if any, and if such beneficiary also dies or if no person has been willed by the depositor, the surviving person from
amongst his or her relatives, in the following order, shall have first title to such deposits:
(a) Husband or wife living in a joint family;
(b) Son or daughter, or adopted son or adopted daughter, living in a joint family;
(c) Father, mother, grand-son, or grand-daughter from the son’s side living in a joint family;
(d) Husband or wife, son, unmarried daughter, father or mother who is living separately;
(e) Grand-father or grand-mother of the father’s side, brother or unmarried sister, living in a joint family;
(f) Nephew, niece, or step-mother living in an undivided family, or a grand-son or unmarried grand-daughter from the son’s side who is living separately;
(g) Uncle, widowed aunt, sister-in-law (elder or younger brother’s wife), or grand-daughter-in-law living in a joint family;
(h) Brothers living separately;
(i) Married sisters, grand-father, grand-mother, widowed daughter-in-law, grand-daughter-in-law, or nephew who are living separately.
(2) If there is no one in the order of priority referred to in Sub-section (1), the heir shall have the title to such deposit, and if there is not even an heir, the deposit shall accrue to the Government of Nepal.
(3) Notwithstanding anything contained in the laws in force, no amount deposited with a licensed institution shall be handed over to anyone without the approval of the person who has the title thereto under Sub-section (1).

82. Particulars of unclaimed deposits or dividends :

(1)A licensed institution shall submit to the Rastra Bank particulars of deposit accounts which have remained unoperated, and of those the title to which have not been claimed under this Act for ten years, within the first month of each fiscal year.
(2) A licensed institution shall submit to the Rastra Bank particulars of dividends payable to shareholders or their heirs who have failed to claim payment thereof even within five years from the date of declaration of the dividends, within the first month of each fiscal year.
(3) A licensed institution shall publish at least one time in a newspaper of national circulation particulars of the accounts which have remained unoperated or deposits or dividends which have not been claimed or distributed as mentioned in Sub-section (1) or (2).

83. Recovery from or confiscation of deposits : If any business or transaction is carried on by pledging as collateral or security the amount deposited with a licensed institution, or if amounts are deposited with a licensed institution with misappropriated funds belonging to the governmental body or any body fully owned by the
Government of Nepal, or with funds obtained by committing any action which is deemed to be an offense under the laws in force, or with funds collected through any activity relating to terrorism or organized crime, the such deposits may be confiscated or such collateral or security or misappropriated or other funds may be recovered from such deposits in accordance with the laws in force.

84. Management expenses: The management and establishment expenses of a bank or financial institution shall not exceed the limit prescribed by the Rastra Bank.

85. Power to remove difficulties : If there arises any difficulty in the enforcement of any provision contained in this Act, the Rastra Bank may, with the approval of the Government of Nepal, issue necessary orders to remove such difficulty.

86. Exemptions and facilities :

(1) Notwithstanding anything contained in the laws in force, any deed of credit not exceeding one million rupees supplied by a licensed 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 be registered.
(2) Subject to Sub-section (2) of Section 51, the rates of interest payable to and chargeable by a licensed institution on credits or deposits and the procedures of collecting such interest shall be as prescribed by the licensed institution. Provided that the licensed institution shall comply with the directives issued by the Rastra Bank from time to time in respect of such rates of interest and the procedures of collecting such interest.
(3) The repayment period of the credit to be supplied or obtained by and of deposits to be accepted by a licensed institution shall be as prescribed by the licensed institution.
(4) No revenue stamp fee shall be charged on any kind of document related with the licensed institution.

87. Not to be liable for act done in good faith :

(1) The officers of a licensed institution shall not be held individually or collectively liable for any act or action done or taken in good faith under the Nepal Rastra Bank Act, 2058(2002), this Act or the Rules or Bye-laws framed hereunder or the orders or directives issued thereunder. Provided that they shall be held individually liable for any consequence of any act done with malicious recklessness or mala fide intention.
(2) If any kind of lawsuit is filed against a licensed institution in relation to any loss or damage caused or likely to be caused by any act done or purported to be done in good faith for the compliance with the Nepal Rastra Bank Act, 2058(2002), this Act or the Rules or Bye- laws framed hereunder or the orders or directives issued thereunder, the concerned licensed institution shall bear the expenses of such lawsuit. Provided that no licensed institution shall bear the expenses of
any lawsuit filed in connection with the consequence of any act done with malicious recklessness or mala fide intention.

88. Oath-taking :

(1) Any officer appointed for the first time in a licensed institution shall, prior to assuming the duties of his or her office, take an oath of secrecy and honesty as prescribed.
(2) No officer of a licensed institution shall disclose to any unauthorized person any information or notice known to him or her in the course of discharging his or her duties.
89. Acts and actions not to be invalidated : No act and action done and taken by a director or the Board shall be invalidated only for the reason that there has been any irregularity in the appointment of the director or in the formation of the Board or any vacancy in the office of director.

90. Power to frame Rules : The Rastra Bank may frame necessary Rulesfor implementing the objectives of this Act; and such Rules shall come into force after being approved by the Government of Nepal.

91. Power to frame Bye-laws :

(1)A licensed institution may frame Bye- laws for systematically operating its business and implementing the objectives of this Act. Such bye-laws shall come into force after being approved by the Rastra Bank.
(2) Without prejudice to the generality of the powers conferred by Sub-section (1), a licensed institution may frame Bye- laws on any or all of the following matters:
(a) Rules of procedure of the meetings of Board and the general meeting;
(b) Delegation of powers by the Board to any director or employee;
(c) Appointment, promotion, transfer, dismissal, salary, allowance, gratuity, pension, leave, carry on, discipline and conditions of service of the employees of the licensed institution, and formation of such service;
(d) Conditions of contracts to be made on behalf of the licensed institution;
(e) Matters relating to financial administration of the licensed institution;
(f) Procedures for using the seal of the licensed institution;
(g) Such other functions as required to be performed by the licensed institution pursuant to this Act.

92. Laws in force to govern : The matters contained in this Act and the Rules, Bye-laws, orders or directives issued hereunder shall be governed by this Act and the Rules or directives, and the other matters shall be governed by the laws in force. Provided that the matters contained the Nepal Rastra Bank Act, 2058(2002) shall be governed by that Act.

93. Repeal and saving :

(1) The following Acts are hereby repealed:
(a) The Agricultural Development Bank Act, 2024 (1967);
(b) The Commercial Bank Act, 2031 (1974);
(c) The Finance Company Act, 2042 (1985);
(d) The Nepal Industrial Development Corporation Act, 2046
(1990); and
(e) The Development Bank Act, 2052 (1996).
(2) Any acts done and actions taken under the Acts repealed pursuant to Sub-section (1) shall be deemed to have been done and taken under this Act.
(3) Notwithstanding anything contained in the Act Relating to Recovery of Loans of Banks and Financial Institutions, 2058 (2001), the provisions contained in Section 3 of that Act shall apply to the cases on the recovery of loans of banks of financial institutions incorporated pursuant to this Act.

94. Effect of inoperativeness of the Banks and Financial Institutions Ordinance, 2062(2005 ): With the Banks and Financial Institutions Ordinance, 2062 (2005) being inoperative, unless a different intention appears, the inoperativeness shall not:
(a) revive anything not in force or existing at the time at which the Ordinance became inoperative;
(b) affect the matter in operation as per the Ordinance or anything duly done or any punishment suffered thereunder;
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the Ordinance;
(d) affect any penalty, punishment or forfeiture incurred under the Ordinance;
(e) affect any action or remedy made or taken in respect of any such right, privilege, obligation, liability, penalty or punishment as aforesaid; and any such legal proceeding or remedy may be instituted, continued or enforced as if the Ordinance were in force.