OFFENCE AND PUNISHMENT DECLARED BY NEPAL RASTRA BANK

Hey !

As a central bank of Nepal, what does Nepal Rastra Bank do to deal with offenders?

If you are stuck with this...you are at the right place.

Nepal Rastra Bank has played a significant role in developing a secure, stable and healthy development of banking and financial system. The bank has consistently worked to enhance the public credibility towards the entire banking and financial system of the country.

Due to several reasons, the offenses are committed in order to penetrate the banking and financial system. So, it is duty of central bank to consistently inspect, monitor and supervise the entire commercial bank and financial institutions.

First of all, Nepal Rastra Bank finds out the nature of offense, degree of offense and the effect of offense. After assuring these level of offense, the central bank takes proper action in order to punish its licensed commercial banks and financial institutions.

Generally, any activities done in contravention to the Nepal Rastra Bank Act , 2002 are considered as offense. The offense related activity is mentioned under section 95 and punishment related provisions under section 96 of chapter 11 of Nepal Rastra Bank Act, 2002. 

I have explained these provisions in simplest manner.

Offense gets committed, when anyone does following activities without obeying the Nepal Rastra Bank Act, 2002 or its framed bye-laws, rules, circulars, directives, notices and policy :

• Accepting deposits 

• Providing loan 

• Issuing debentures 

• Issuing any other financial instruments. 

• Charges or pays interest against the policy of the central bank.

• Issue fake, fraudaulent, counterfeit currency, duplicate or copied currency (involved directly or indirectly ).

• Operates the business transaction without obtaining license.

• Any obstruction is made in clearing and settlement process .

Here by ‘anyone’ I mean that, either they can be natural person or artificial person (created by the law). 

If the offender is natural person then he has to bear the punishment. However, if the offender is artificial person then the concerned official will have to bear the punishment.

If any commercial bank or financial institutions has come across any knowledge that anyone has committed such offence then, such information should be transmitted to Nepal Rastra Bank or the Government of Nepal for necessary actions.

However, Nepal Rastra Bank has the power to punish such offender as follows:

Case i ) If the offended value of asset is Ascertainable :

Any of the following punishment, as the legal authority deems fit.

Punishment = 

Upto : 

• 3 x the value of assets actually offended OR, 

• 3 yr of imprisonment OR, 

• 3 x the value of assets actually offended + 3 yr of imprisonment 

Case ii ) If the offended value of asset is Unascertainable :

Any of the following punishment, as the legal authority deems fit.

Punishment = 

upto :

• Nepalese Rs. 1 Million OR,

• 3 yr of imprisonment OR, 

• Nepalese Rs. 1 Million + 3 yr of imprisonment 

( In accordance with the amendment made as on 14th November 2016 as per Nepal Rastra Bank (second Ammendment ) Act, 2016 )

Note:

• It is to be noted that any person who has been indirectly involved into such degree of offense, will be punished up to half of the original offender. 

• Reasonable opportunity is given to be heard to the offender before imposing any kind of punishment.