EFFECT OF CONTROL MADE BY NEPAL RASTRA BANK TO THEIR LICENSED INSTITUTIONS

While the central bank of Nepal takes any type of  control mechanisms to any commercial bank or financial institution, the bank does it so by issuing the the necessary orders in this behalf.
The respective commercial bank or financial institution's 

• Directors, 
• Manager and 
• Employees 

- of such commercial bank or financial institution, for the management and operation of transaction have to provide:

• The assets, 
• Material goods 
• All transaction and its report and 
• other necessary cooperation and facilities 

-to the bank or the official appointed by the bank . 

While central bank takes control of any commercial bank or financial institution, the official appointed by the bank for: 

• The management and operation of transaction of such commercial bank or financial institution, (being within the limitation of order issued by the bank)

 -have to manage and operate such commercial bank or financial institution in the name of such commercial bank or financial institution

•  by taking control of the property and transaction 

unless the central bank decide through orders. 

However, the appointed official for management and operation of any commercial bank or financial institution which is in the control of the bank, can exercise all the rights given to :

• such commercial bank or financial institution, 
• its board of directors, 
• shareholders or manager by prevailing law, 
• memorandum and article association of such commercial bank or financial institution

Such official can exercise the act assigned for the general meeting or special general meeting or any rights by any other way of such commercial bank or financial institution.

Till the date of validity of the order issued by the bank to take the control of any commercial bank or financial institution, 

• No director, 
• No manager or 
• No employee removed and 
• No suspended director  

- of such commercial bank or financial institution, 

• can be involved in the management or 
• take any remuneration or facility from such commercial bank or financial institution 

during the period of being problematic, without written permission of the bank or the official appointed for the management and operation of such commercial bank or financial institution.


The control rights that can be used by Nepal Rastra Bank or the Official Appointed by the Nepal RastraBank: 

Whatever may be mentioned in the Companies Act or other prevailing law, the bank itself or with the prior approval of the central bank-

The officials appointed by the Nepal Rastra Bank can initiate one or more of the following actions for the purpose of restructuring of any problematic commercial bank or financial institution which is under the control by making following orders :

• To cancel or suspend any transaction operating within or outside the kingdom of Nepal. 

• To sell the assets of such commercial bank or financial institution to any other commercial bank or financial institution in terms and conditions determined by the bank. 

• To terminate the employment of the employees working in such commercial bank or financial institution and to appoint new employees in their place as per necessity. 

• To merge such commercial bank or financial institution with other commercial bank or financial institution or,arrange to transfer the assets and liabilities of such commercial bank or financial institution partially or whole to any other commercial bank or financial institution or any other body. 

• To increase the capital, being based on the standard determined by the bank, by selling the share to other person to reduce the participation of the present shareholders or to restructure such commercial bank or financial institution by reshuffling the board of directors.

• To reduce the capital reflecting the actual price of real assets of such commercial bank or financial institution and determine the face value of the shares in the proportion of reduced capital.

• To do necessary managerial restructure or corporate restructure by closing the branches and transactions which are not properly running for the protection of the interest of the depositors, shareholders, creditors and general public.

• To implement or cause to implement other measures determined by the bank to make competitive for the problematic commercial bank or financial institution. 

However, the reasonable opportunity of being heard is provided to them before taking any kind of decision.

Note:

# If Nepal Rastra Bank feels that prior opportunity of hearing can make any negative effect to the following :

• the interest of its depositors,
• shareholders, 
• creditors or 
• general public, 

-then the bank can provide the opportunity of hearing as soon as possible after making such decision.

# if the central bank gets satisfied with the reason and basis presented during the time of hearing it can change or repeal the decision.

* Click this link given as follows :

• For more details regarding Nepal Rastra Bank 

• For more details regarding Objectives, duties, function and powers of Nepal Rastra Bank 

• For more details regarding Currency of Nepal and its related rules 

• For more details regarding Financial Provisions of Nepal Rastra Bank 

• For more details regarding Foreign exchange policy, regulation and reserves and govermental relationships of Nepal Rastra Bank