Chapter-3 Acts and Activities

Chapter-3 Acts and Activities
12. 44 Mandatory deduction of money from salary of employees and payment thereof to the Fund:

(1) 45 Every office shall deduct the fund amount at the rate as prescribed but not less than Ten percent from the annual salary of its employees, add such amount to be set by such percentage of that amount as prescribed and pay the same to the Fund.
(2) The amount of Fund deduction shall be deducted compulsorily. The consent of the concerned employee shall not be required for such deduction.

(3) 46 The amount of Fund deduction of an employee and amount to be added thereto shall be as per the rules of the office paying salary to him or her.
(4) If any employee is suspended, his or her amount of Fund shall not be deducted. Provided that if the suspension of that employee is removed on the charge being not proved, amount shall be deducted proportionately from his
or her salary of the period of his or her suspension, amount to be added shall be added thereto 47 and lump sum of the amount shall be paid to the Fund.
(5) The following provisions shall apply to the period while any employee is on leave without pay or with half pay:
(a) No Fund amount shall be deducted while on leave without pay;
(b) Fifty percent Fund deduction shall be made at the rate specified in Sub-section(1) 48 while on leave with half pay.
(6) 49 Every chief of office shall regularly deduct the Fund amount from the salary of the employees serving in his or her office and add thereto such amount as to be added thereto and furnish the same, along  with the
statements, with such office within such period as prescribed by the Fund.

(7) 50 Nothing in this Act shall be deemed to bar the paying to the Fund of any other amount in the name of an employee of the office, in addition to the amount to be added pursuant to Sub-section (1).
12A. ……………… 51
12B. 52 Fund deduction of employees of the Institution: (1) An institution 53 may deduct the Fund amount from the monthly salary of its employees pursuant to Section 12 and cause to be paid to the Fund.
(2) If the Government of Nepal considers appropriate, it may, by publishing a Notification in the Nepal Gazette, order any institution to pay to the Fund the amount as referred to in Sub-section (1) from the monthly salary of the
employees who receive monthly salary regularly.
(3) All provisions of Section 12 shall apply to the employees who Fund amount has been deducted under this Section.
(4) In the event of the dissolution or liquidation of an institution deducting the Fund amount and paying the same to the Fund under this Section, the employees of such an institution shall be deemed to have been removed
from service for the purposes of this Act.
(5) The Fund deduction amount paid by any corporate body to the Fund pursuant to Section 16 prior to the commencement of this Section shall be deemed to have been paid pursuant to Sub-section (1).

12C. Person Involving in Self-Employment may deposit the Amount in the
Fund:

(1) The person involving in self-employment may deposit the amount as prescribed in the Fund.
(2) Other provisions with regard to the process of collection of the amount deposited in the Fund in accordance with Sub-Section (1) and its payment and facility available from the Fund shall be as prescribed.
13 54 . Acts to be done by the Fund after payment of money to the Fund: (1) After the payment of money to the Fund pursuant to Section 12, 12B and 12C 55 ., the amount so paid by the name of every employee and the person
involved in self-employment shall be deposited in the account of that employee and the person involved in self-employment.
(2) Every year after the closure of the year, the Fund shall give an endorsement letter or annual statements to every employee 56 , setting out, interalia, the amounts deducted every month from the salary of the
employee, amount added by the office 57 and other deductions and additions and interest accrued on the amounts so paid.
(2A) 58 Notwithstanding anything contains in Sub-Section (2), the provision with regard to the person involving in self-employment shall be as prescribed.
(3) The Fund shall give an identity card to every employee and the person
involving in self-employment 59 .

(4) The Fund may prescribe fees for the giving of the identity card………… 60 pursuant to Sub-sections (2) and (3) or giving another identity card………… 61 in the event of loss, deface or torn out of such an
identity card……….. 62
14. 63 Entitled to withdraw amount: (1) 64 An employee who pays the Fund deduction to the Fund continuously for at least Five years may withdraw such an amount from the Fund as may not be in excess of the Sixty percent
of the total amount deposited in his or her name.
(2) Notwithstanding anything contained elsewhere in this Act, no employee may withdraw amount from the Fund while he or she is in service except in accordance with Sub-section (1).
(3) Once any employee has withdrawn amount pursuant to Subsection (1),  he or she may not again withdrawn amount prior to the completion of Two years after the date of such withdrawal.
14A 65 .Reconciliation of amounts: (1) Where any employee has taken an advance
from the Fund prior to the commencement of this Section, the principal and
interest due and payable by him or her out of the amount so taken as advance
shall be deducted from the Fund deduction amount accumulated in his or her
name and reconciliation of amounts shall be made accordingly.
(2) If reconciliation of amounts is made pursuant to Sub-section (1) and such
an employee wishes to again withdraw amount from the Fund, only the
remaining amount to be set by deduction the already withdrawn amount
from the amount as referred to in Sub-section (1) of Section 14 shall be
allowed for withdrawal.
Provided that, he or she shall not be entitled to again withdraw amount prior
to the completion of Two years after the date of withdrawal of amount or
taking advance from the Fund.
(3) If an employee who has borrowed the home loan from the Fund wishes
to have the reconciliation of amounts from the Fund deduction amounts, he
or she may have such reconciliation pursuant to Sub-section (1).
14B 66 . Amount withdrawn from the Fund may be returned: An employee may
at one time or at times return to the Fund the amount withdrawn pursuant to
Section 14. Interest and profits shall be provided pursuant to Section 15 on
the amount so deposited.
15 67 . Interest 68 and profits to be provided:

(1) The Fund shall provide interest on the amount deposited by the name of an employee at such a rate as may be
determined from time to time pursuant to Sub-section (2).
(2) In determining the rate of interest, the Fund shall determine it on the basis of propriety having regard also to the total amount in his or her  custody, total amount of investment made therefrom, total amount of interest
or dividends receivable therefrom and administrative expenses.

(3)……………. 69
(4) If, on evaluating the assets and liabilities of the Fund according to the market value on the day of closure of the year in every fiscal year, it is not sufficient to provide interest by Three percent per annum, the shortfall
amount as required to provide interest by that rate shall be chargeable on the Consolidated Fund of the Government of Nepal.  shall continue to provide interest on the amount deposited in the Fund by the
name of that employee unless and until the amount is withdrawn from the Fund.
(6) 71 The amount of profits that remains after setting aside the amount pursuant to Section 25 from the amount standing as profits in the already audited annual statements of the Fund shall be ascertained in accordance
with the rate and procedures specified by the Board vis-à-vis the amount deposited in the name of depositors by the beginning of the financial year of the assessment of profits, and the ascertained amount shall be credited to
their accounts.
(7) ……………. 72
15A 73 .Fund deduction to be refunded: (1) 74 Any employees shall get refund of lump sum of all amounts including the principal and interest deposited in his  or her account immediately when he or she is relieved of service for any
reason. If he or she dies, his or her nominee or nominees shall obtain the amounts according to the will. If he or she has not nominated any person or if his or her nominee is also dead before the death of the nominator, the heir
as per the prevailing law relating to inheritance shall receive such amounts.
(1A) 75 Any employee may nominate any person for the purposes of Sub- section (1). The procedure of so nominating any person by the employee shall be as specified by the Fund.
(2) If a person nominated by an employee dies or if the employee so wishes despite he or she is alive, the employee may nominate another person in his or her stead or alter the contents set forth in the letter of nomination.
(3) If, after the discontinuation of the service of an employee, the employee does not show up to get refund of the Fund amount or does not give any notice to the Fund in relation to the refunding, his or her nominee shall be
entitled to his or her Fund amount. If even the nominee does not show up to  receive that amount until Two years Nine months after the date on which he or she may get it, the Fund shall arrange to publish a notice for information
to the people generally. If the nominee does not show up to receive the amount even within Three months of the date of publication of the notice, 76
74 Amended by An Act enacted for the Amendment of Some Laws to Maintain
Gender Equality and Eliminate Gender Violence, 2072  the heir as per the prevailing law relating to inheritance shall be entitled to get that amount 77 .
(3A) 78 Notwithstanding anything contained in Sub-section (5) of Section 15, if a person who is entitled to have the refund of the deposited amount even until Six years after the original date on which such amount has stood
refundable, the amount shall be deposited in a separate account, and after the amount is so deposited in a separate account, no interest shall be payable on that amount.
(4) Notwithstanding anything contained in Sub-section (1), the Fund shall …………..
79 deduct and recover such principal borrowed by an employee from the Fund and interest accrued thereon as may be due and payable by the employee.
15B 80 . To give notice to the Fund about the condition of employee: (1) In the event of fresh appointment, transfer and promotion of employees, the office issuing letter of such fresh appointment, transfer and promotion shall give a
notice thereof to the Fund immediately.
(2) If any employee is to get retirement due  to age bar, the concerned office or employee records office 81 shall, in advance of Six months of retirement, give a notice thereof to the Fund, setting out the date on which the employee
gets retirement.
77 Amended by An Act enacted for the Amendment of Some Laws to Maintain
Gender Equality and Eliminate Gender Violence, 2072
(3) If any employee gets retirement or is relieved of office for any other
reason, the then office shall give a notice to the Fund, also setting out the
date of getting retirement or relieving of office for the purpose of refunding
the Fund deduction amount of the employee.
16. ………………………. 82
17. Transfer of capital: (1) The capital and liabilities of the civil provident fund,
military monetary fund and employee’s provident fund operated by the
Government of Nepal by the date prior to the commencement of this Act
shall be deemed to have been transferred to the Fund after the
commencement of this Act. The Government of Nepal shall hand over the
records, documents relating to the capital and liabilities of these funds and
the business to be carried out under this Act to the Fund within Six months
after the commencement of this Act; and after so receiving the capital,
liabilities and concerned records and documents, moneys already in deposit
in the name of employees prior to the commencement of this Act shall be
deemed to have been deposited in the name of employees, and such moneys
shall be operated under this Act.
(2) In receiving the capital and liabilities pursuant to Sub-section (1), if the
Fund finds that all or some of the principal or interest or both out of the
capital invested by the civil provident fund, military monetary fund and
employee’s provident fund cannot be recovered, the Fund shall be deemed to
have received such capital investment only by the price/value as valuated by
the Fund in relation to the capital and investment. Despite receipt by the
Fund of such capital, investment, such money as remaining shortfall in that
capital, investment shall be available to the Fund from the Consolidated
Fund of the Government of Nepal.
(3) Prior to receiving the capital, investment as held to be of lesser value or
unrecoverable pursuant to Sub-section (2), the Fund shall give a report
indicating the actual statements, condition of such capital, investment and
valuation thereof according to the market value, to the Government of
Nepal.
(4) Upon receipt of a report pursuant to Sub-section (3), the Government of
Nepal may send a directive to the Fund within Three months that the
Government of Nepal shall take over such capital, investment, and that
money of such capital and investment shall be immediately available to the
Fund from the Consolidated Fund of the Government of Nepal. The Fund
shall abide by such a directive.
18. Security of fund: Notwithstanding anything contained in the Nepal laws in
force, the following matters shall be governed by the following:
(A) No coparcener of an employee shall, in consideration for his or her
partition share, be entitled to the moneys deposited with the Fund in the
name of the employee. The employee shall not also be bound to
partition such moneys. Despite a judgment by a court, no creditor shall
be entitled to claim the moneys deposited with the Fund in the name of
the employee. No moneys deposited with the Fund in the name of the
employee shall be confiscated for any offences including those
punishable with confiscation of entire property pursuant to the Nepal
laws. Such moneys shall not also be deducted or confiscated also for
any government dues or arrears.

(B) No tax of any kind other than income tax 83 shall be levied on the
moneys deposited with the Fund in the name of any employee and on
profits of the Fund and on the moneys deposited by the employee upon
drawing the same from the Fund out of the moneys so deposited with
the Fund.
(C) In distributing the assets of a company in which any amount of the
Fund has been invested or which has borrowed a loan from the Fund,
upon the liquidation of the company, the Fund shall have the first and
foremost right in the assets of such a company for the investment by the
Fund, dividends thereon and outstanding and recoverable amount of the
loan. Even in cases where any amount of the Fund is due and
recoverable from any other person and such person becomes insolvent,
the Fund shall have the first and foremost right in the assets of such a
person for the amount to be recovered by the Fund. Only after the
recovery of the amount due and payable to the Fund, other persons shall
have the right in the remaining assets of such a company or person.
84 Provided that, this provision shall not apply to loans disbursed by the
Fund on the basis of co-financing pursuant to Clause (C2) of Section
19.
(D) 85 If any industry, enterprise, body corporate or employee fails to pay in
time such advance, loan or interest as required to be paid to the Fund in
accordance in the deed, the Fund may recover the amount of the Fund
by foreclosing 86 and auctioning the house and land or other property
furnished by such an industry, enterprise, body corporate or employee
as a security or wealth guarantee 87 in favor of the Fund after Thirty Five
days of the expiration of that time. If no one buys such house and land
on the auction sale, the Fund may take over the ownership of that
property. In such a circumstance, the government offices responsible
for maintaining the records of such property or recovering the land
revenue thereon shall do action whatever required, including
transmission, on the records maintained in these offices, without
charging any fee.
(E) 88 After the Fund has taken a property as a security or wealth guarantee 89
pursuant to Clause (d) or Section 19A., the borrower shall not furnish
such a property as a security in favor of, or usufruct it or otherwise
transfer his or her title in it, to another person, and if the registration
making office is requested by the Fund to withhold that person, the
office shall withhold it.
(F) 90 The rate of interest to be taken and given by the Fund shall be as
specified by the Fund.
(G) 91 In lending a loan or advance against the security of an immovable
property to any industry, enterprise, body corporate or employee, the
Fund may specify the repayment period of more than Five years.
(H) 92 In lending a loan to an employee against a security or wealth
guarantee, the Fund shall lend the loan only after ascertaining that the
security or guarantee in any place within Nepal has been furnished in its
favor. The method of valuating the property so furnished as a security
or wealth guarantee shall be as determined by the Fund.
(I) 93 If it is required to attach and auction the property furnished as a
security or wealth guarantee in the event of non-repayment of the
installments of principal and interest of a loan or advance lent or paid
by the Fund, the Fund may publish a notice in a local newspaper, giving
a time-limit of at least Thirty Five days and attach and auction such a
property after the expiration of that time-limit.
————- 94 .
18A 95 Immunities and Privileges of the Fund: Notwithstanding anything
contains in prevailing laws, the Find shall have following immunities and
privileges.
(A) No registration fee shall be charged in registration of loan or re-loan to
be lent by the Fund.
(B) No Income Ticket Charge or Registration fee shall be charged in the
deed of transaction to be done by the Fund.
19. 96 Powers of the Fund: The Fund shall have the following powers in relation to
the mobilization of its balance and assets and expansion of the range of social
security:
(A) To make investment in bonds of the Government of Nepal or foreign or
local organization recognized by Government of Nepal,
(B) To make investment in cash certificate fixed deposits of banks
established as per the prevailing law,
(C) The Fund may make investment, against appropriate bank guarantee in
cash certificate fixed deposits of financial institutions established as per
the prevailing law, to which the Fund deems appropriate,
(D) To lend moneys to any industry, enterprise or body corporate, against
the guarantee of the Government of Nepal on such terms and interest as
specified by the Fund,
(E) To make investment in shares of banks and financial institutions;
Provided however that, in so making investment in shares, investment
shall be so made as not to exceed Twenty Five percent of the issued
capital of such a bank or financial institution.
(F) Jointly supplying credits on the basis of co-financing, in such areas as the
Fund considers appropriate, in collaboration with other banks or
financial institutions established under the laws in force in accordance
with the mutual agreement entered into for the division of the collateral
pari passu;
(G) To make investment in debentures issued by such companies or bodies
corporate incorporated pursuant to the laws in force as the Fund
considers appropriate;
Provided however that, in so making investment in debentures,
investment shall be so made as not to exceed Twenty Five percent of the
issued debentures of such companies or bodies corporate.
(H) The Fund may make investment in the area of power generation and
distribution, agriculture development, tourism and construction of larger
infrastructures promoted by Government of Nepal or anybody having
under the ownership or control of Government of Nepal,
(I) The Fund may incorporate or establish company or institute in order to
operate mutual fund by the Fund solely itself or in collaboration with
other institution in involvement of employees and the persons involving
in self-employment,
(J) The Fund may operate mutual fund in involvement of employees and the
persons involving in self-employment,
(K) The Fund may operate housing projects solely by the Fund or in
collaboration with other institutions and directly or by installment sell,
distribute or rent houses and housing plots;
(L) The Fund may make investment solely or in collaboration with other
institutions for the development of educational sectors including
university, teaching hospital, medical college as well as production of
drugs, power generation, tourism, agricultural development by carrying
out feasibility study,
(M) The Fund may sell and distribute houses and housing plots or establish
and operate companies or institutions for the operation of housing
projects;
(N) To construct buildings in the land having under the ownership of the
Fund and rent them;
(O) To lend moneys to any companies or bodies corporate incorporated
pursuant to the laws in force, by specifying terms and interest, against
the guarantee of any banks or financial institutions established under the
laws in force;
(P) To make investment in such areas as the Fund considers appropriate,
against adequate security or guarantee;
(Q) In the event of receiving by the Fund of any assets belonging to any
institution for any outstanding loan lent by the Fund, to operate that
institution solely or in collaboration with any other institution or
establish a new institution for the utilization of the assets;
(R) To establish and operate retirement fund, health insurance, social
security fund by the Fund solely or in collaboration with any other
institution in the prescribed area of social security including retirement,
hearth insurance, etc.
(S) In the event of failure of any individual or institution to repay the loan or
debt within stipulated time limit or to recover the principal and interest
as per the law in case of any investment made by the Fund in any
mortgage or guarantee and to recover the outstanding loan from other
movable or immovable assets having under the ownership of borrower
individual or institution in case of failure to recover such loan by the
deposited amount or mortgage of concerned person;
(T) To provide loan to the employees or the person involving in self-
employment in the terms and conditions as specified by the Board;
(U) To do any acts in the interests of the employees, taking into
consideration of the security of the Fund, by obtaining approval of the
Government of Nepal;
(V) The Fund may conduct social security or welfare related activities for
the promotion of maximum benefit and interest of the employees and the
persons involving in self-employment;
(W) To do all such other acts as may be incidental in the course of doing acts
as required to be done under this Act.
19A. 97 To make Recovery: (1) If it is found that the employee, having
responsibility to deposit the amount deducted from monthly remuneration of
the depositor for the purpose to deposit to the Fund including the amount to
be added in accordance with the prevailing law in said amount, has sent the
amount to deposit to the Fund pursuant to this Act and Regulation enacted
under this Act, the Fund shall issue order to such employee by specifying the
time limit to deposit the lump-sum amount by making calculation of the
amount to be deposited in the fund of the depositor as well as the interest
payable by the Fund to the depositor in the account of the concerned
depositor having at the Fund.
(2) The concerned employee shall be liable to deposit the amount of the
depositor to the Fund within the time limit as specified in Sub-Section (1).
(3) Notwithstanding anything contains in this Act elsewhere, in case of
failure to deposit the amount of the depositor within the time limit as
specified in Sub-Section (2), the Fund shall deposit the amount in the account
of the depositor by making recovery of such amount from the account of such
employee remained in the Fund.
(4) If the whole amount of the depositor couldn’t be recovered while making
recovery in accordance with Sub-Section (3), the Fund shall deposit the
amount in the account of the depositor by making recovery it from other
movable or immovable assets of such employee like the dues payable to the
Government.
20. Prohibited acts: The following are prohibited from being done by the Fund:
(A) To pay any advance from the Fund whether or not taking any security or
guarantee, other than any advance to be paid in the course of daily and
travel allowance for the purpose of the business of the Fund and any
advance to be given to and taken from any director of the Board in
accordance with the rules framed under this Act; to lend moneys against
the guarantee of the residual of a trust land.
98 Provided that, nothing in this provision shall be deemed to bar the
paying of the same loan and advance to the Director as may be lent to
other depositor employees of the Fund