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Nepal Bank Law, 1994

Whereas, it is expedient to establish and operate a Bank, for no Bank
was established in Nepal till the date, which was causing hindrance for the
economic development of the country and creating problems to the public;
now therefore for the purpose of fulfilling the need of providing facilities to
the public and for the development of the nation,

Be it enacted the following law:

1. (a) This law shall be called "Nepal Bank Law. This Law shall
only be applicable to the Nepal Bank Limited.
(b) This law shall come into force on such a date as specified in a
Notification.
2. Definition of some main words shall be as follows:
(a) Wherever the word "Bank" has been used, it shall mean the
"Nepal Bank Limited" established under this law.
(b) Board of Directors- Board of Directors appointed (Mukarar)
in this bank.
(c) Director General- Chief Personnel of the Board of Director.
(d) Letter of Credit- A letter written by a bank to any other bank
to accept a cheque of a person upto the certain amount.
(e) Chain Guarantee (Sikri Jamani)- Letter of guarantee where
one person guarantees the all and all persons guarantee the
one.
(f) Security- Guarantee kept by a person in the form of cash,
kind or any other property or documents thereof which is in
his/her possession (Kabja) to take the loan (Karja).

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(g) Fixed Account- An account with the details of the amount in

which the customer deposits his/her money for a fixed period
of time.
(h) Current Account: An account with the details of amount from
which one may withdraw his/her money as and when desires.
(i) Saving Account-An account with the details of amount
deposited in the bank from the minor savings out of one's
own income.
(j) Debenture- A deed of loan (debt) withdrawn against the
security or guarantee of the property of a company.
(k) Bill of exchange- A document singed and issued by a person
to any other person to provide cash to a particular person or
the bearer on such a date or on his/her request.
(l) Promissory Note- A document prepared with a promise
(Wada) that particular amount shall be given to a person or a
person authorised by him/her on a particular date or on
his/her request.
3. (a) This bank shall be called "Nepal Bank Limited".
(b) Place where Head office of the Bank shall be located-
Kantipur, Nepal.
(c) All the activities, transactions, accounts and law suits etc shall
be maintained in the name of the Bank.
(d) For the functions of the Bank, a seal with the name "Nepal
Bank Limited" shall be used.
4. (a) This Bank has been authorised to collect Ten Million Rupees
from the sell (allocation) of share as its principal amount
(Muldhan). Out of this amount, at present, it shall run its
business upon collecting Two and a Half Million Rupees by

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selling (allocating) the share at the rate of one Hundred

Rupees. Out of this Two and Half Million Rupees of Half a
Million Rupees of Five Thousand shares shall be collected in
the very beginning and the amount of Twenty Thousand
shares, which is Two Million Rupees, shall be collected in
installments (Kistabandi).
(b) Out of Twenty Five Thousand shares, One Forth of it may be
taken by His Majesty/Highness (Sarkar); thereafter the
remaining shares may be taken by the Nepali customers.
(c) In a case where the principal amount (Muldhan) collected
from the sale of Two Thousand Five Hundred shares is not
sufficient to run the banking activities and additional amount
is required; new shares shall not be issued to the others till the
previous-shareholders agree to purchase such shares.
5. If the principal amount (Muldhan) of the Bank has to be increased or
decreased, the Board of Directors shall submit a proposal to the
General meetings, and it shall be abided by if the decision is passed,
at least, by one third votes.
6. At present the shares of this Bank shall be purchased only by the
male or female, who were born as a Nepali Citizen (Rayat) or who
are Nepali Citizen (Rayat) and shall not be transferred to any other
person.
7. Except one is involved in an offence of Gathgadi (offence against
the throne) the share of the Bank or any amount deposited in the
Bank shall not be withhold, taken or confiscated even in an offence
where entire property is confiscated. The share and deposit amount
shall remain entact in his/her name where it is laying and after
his/her death its ownership shall be maintained (transferred) in the

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name of his/her successor. No one shall be entitled to make any

claim on such amount. In a case, where a person has withdrawn any
loan against the security or guarantee of the Bank share or deposit;
or someone has deposited money misappropriating from the
government account, even in such a case, the amount which is equal
to the amount so produced as a security or guarantee or the amount
so misappropriated and deposited shall only be realized from such
amount accordingly.
8. In case, the Bank suffers a loss, and such a loss has to be recovered
from the property of the Bank, the shareholders shall not be liable to
pay the amount from their private property which could not be
recovered from the property of the Bank.
9. The Bank may start its functions as referred to in the Company Law
when One Million Rupees shall be collected from the sale of the
allocated shares.
10. The Board of Directors, on its discretion, may open branches or
agency of the Bank within and/or outside of the country on an
appropriate time. The branch office so established may be closed by
the Board of Directors.

Board of Directors
11. (a) There shall be a Board of Directors to supervise, manage and
operate the Bank. The functions of the Bank shall, except to
be done by the annual general meetings of the shareholders,
be conducted in the supervision of and under the Board.
(b) The Board of Directors shall have the following Directors:
Director General- To be appointed by the government.
Two Directors- To be appointed by the government.

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Three Directors- To be elected by the General Body

meetings of the shareholders.
12. The remuneration and allowances of the Director General and the
Directors shall be provided from the income of the Bank.
13. The tenure of the Director General and Directors shall be Three
years each. In case he or she is not reappointed or reelected other
new persons shall be appointed (Niyat).
14. In a case the post of the Director General or Directors, becomes
vacant due to any reason before the last date of tenure the Directors
shall be appointed by the government for the remaining period. In
the case of elected directors who were elected by the shareholders
from the Annual General Meeting such an appointed Directors shall
remain in the post till the Annual General Meeting is convened.
15. Notwithstanding anything contained in Section 13, in relation to the
tenure of the Director General or Directors to be appointed for a
period of Three years, for the purpose of first appointment, one of
the Directors out of Three, to be appointed by the Government and
of the directors out of Three to be elected by the shareholders, shall
be appointed for a period of Two years; and the tenure of the new
appointee and re-appointee shall be Three years from the date of
such appointment.
Assembly (meetings) of the Board of Directors
16. The Assembly (meetings) of the Board of Directors shall resume, on
the discretion of the Director General, as required. Such a meeting
shall not be conducted unless Four of the Directors are present.
17. The Director General shall call the meetings immediately in a case
Two of the Board of Directors or at least Thirty shareholders request

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for the meetings of the assembly; if he/she does not call for such a
meeting, the government shall cause for such meetings.
18. The Director General, if present, or one of the Board of Directors, in
a case of his/her absence, elected by the Directors from amongest
themselves, shall chair the meetings.
19. One Director shall have one vote. The matters submitted before the
meetings shall be decided by the majority upon discussion. In case
of a tie of the votes, the opinion of Director General shall prevail.

General Meeting of the Shareholders

20. The General Meetings of the Bank shall be held at the Head Office
of the Bank within Forty Five days of the end of the bank year. The
Special General Meetings shall be held on the discretion of the
Board of Directors or in case, Fifty shareholders request for the
same.
21. Each shareholder shall be entitled to attend present in the General
Meetings.
22. The shareholders shall be entitled to discuss on the half yearly
accounts to be presented by the Bank, Annual Report on the
functions and activities of the Bank, profit and loss account
(Waslat), profit to be distributed on the discretion of the Board of
Directors, auditors report, in the General Meetings.

Vote of the shareholders

23. All the shareholders registered as a shareholder, having Five shares,
shall be entitled to have one vote and the shareholders, having more
than Five shares, shall have one vote for each Five shares not
exceeding Thirty votes altogether.

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24. One may cast his/her votes so mentioned, in person or through a

representative (proxy); while appointing a representative no one
shall appoint a person other than the shareholder.
25. No one shall be entitled to cast his/her vote without paying the
amount for the share prescribed therefor.
26. Thirty Three percent of shareholders may revoke (remove) the
elected Directors by a special proposal and they may also elect and
appoint other persons in their place.

Functions of the Bank

27. This Bank has been authorised to perform the following functions:
To pay back the money incurred in the course of its
promotion...................1
To collect money, with or without interest, from the government,
public and foreigners and open account in their
name.............................................2
To issue loan (Sarsapat) against sufficient security, in discretion, as
following............................................................................................3
Security promissory note guaranteed by the Government of
Nepal, British Government or other foreign
government..............................1
Any commodity or letter of authorisation relating to any
commodity..............................................................................2
Share or debenture of the company registered pursuant to
Nepal Company Law..............................................................3
Bill of Exchange accepted by an authorised (Mathawar)
person and legally prepared deed (Tamsuk) or promissory
note done by more than Two authorised persons not engaged

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in the joint venture (Sagha Kam) or by the

company................................................................4
To invest (Saapat Dine) on sufficient (Kaphi) security to the
companies, agreeing to work profitable functions relating to
agriculture, mines, road, railway, ropeway etc. or arrange for the
customers to invest in those sectors..............................................4
To issue loan in interest for a period of Six months on the Chain
(Sikri) Guarantee of Two or more Mathawar persons to whom the
committee trusts..........................................................................5
To sale or purchase a deed prepared against the security of specific
trade or agriculture (Khetibali), Promissory Note or Bill of Exchange
which could be paid Nepal within Ninety days on which Two or
more Mahtawar people are Dhanjamani.......................................6
To sale or purchase the Bill of Exchange related to the products
(Paidawar) or finished goods, which could be paid in Nepal within
Ninety days in which a Mathawar person has taken the
guarantee.......................................7
To exchange Nepali Currency (Mohar Rupayan) with the currency
(Kalo Mohar) of Bhot and currency (Note, Rupayan) of
India...............................8
To lend loan (Karja) to a Mathawar person who can immediately
return it as the Bank so requires.......................................................9
To take money (Sarsapt) against the Dhito Bandhak of the property
of the Bank.....................................................................................10
To manage, sale, or rent (Bal) the property of the Bank.................11
To open Savings Account............................................................12
To recover the amount in case it is not paid back with in the agreed
date withdrawn from the bank in the guarantee of Bill of Exchange,

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Promissory Note or Commodities or Letter of Authority

(Adhikarpatra) of the same..............................................................13
To sale, purchase or accept (Sakarnama) the cheque, Hundi,
promissory Note, Bill of Exchange and Tirja of the Government of
Nepal etc.............14
To issue and accept (Chalaune) the Letter of Credit.......................15
To sale or purchase Gold, Silver, Ginni, Asarfi..............................16
To accept Gold, Silver or ornaments of the same or Juharat as
Bandaki for a period upto One year...............................................17
To perform any other function in accordance with the order or Purji
of the Government.......................................................................18
To take into custody the money of the
Government.........................1
To send and Transfer (Chalan) money through the Bill or
Exchange, cheque or Hundi throughout Nepal and
abroad.................................2
To cause to sale or purchase Gold, Silver and share and
debenture of the company................................................3
To collect the profit (Munafa) of the company share and
interest of the Promissory Note or
debenture......................................................4
To function as a commission agent to the customers.......................19
To take into custody (Jimma), cause transmission (Dakhel
Khareji) or sale or purchase of the shares or securities of the
limited company................................................................1
To collect or recover the interest or profit (Munafa) of the
shares or securities......................................................2

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To send and forward (Chalan) the Rupees (money) raised out

of the shares or securities throughout Nepal and
abroad..............................3
To manage the land or any other property (Jayajetha) and to
cause to collect the profit thereof......................................4
To pay (Bhuktan) and transfer money within the country,
Hindustan and abroad for the customers...........................5
To pay remuneration to the personnels (employees) and service
holders (Nokaran) of the Bank and to manage for pension and
provident fund for them...................20
To pay interest to the money collected (deposited) in the Bank and
distribute the profit of the Bank shares.......................................21
To introduce Nepal Bank all over the world (Desh Deshawar) and to
increase its faith in the mind of the public..................................22
To do all other acts as required to perform the functions of the Bank
pursuant to this Bank Law............................................................23
28. The Bank shall not do the following acts:
To lend money (Karja) against the guarantee of the shares of Nepal
Bank Limited...........................................................................1
To lend money (Karja) against the Dhito of lands in the date of
(Bhaka) a period more than One year...........................................2
To lend money (Karja) against the Shes of the Guthi (trust)............3
29. A consent of all the Directors shall be required to lend money
(Sarsapat) to the Director General, Director, Chief Manager,
Manager, personnel, workers (Kamdar) or staffs (Karinda) of the
Bank.
Shares

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30. (a) A share of the Bank shall be considered to be movable

property.
(b) There shall be serial number in each share of the Bank.
31. A person, whose name has been mentioned in the share certificate or
so transferred along with the total number of the share and seal of
the Bank has been affixed on it, shall be considered the owner of the
share.
32. The Bank shall maintain a Register of shareholders as follows:
Names of Three generations...........................................................1
Address.........................................................................................2
Serial number and total numbers of the shares.............................3
Amount received for the share......................................................4
Date of registration of the shareholder..........................................5
Date of registration of new shareholder upon revoking the name of
the original (Saabik) shareholder..................................................6
33. (a) The Bank shall keep the shareholder's register in the office of
the Bank. The shareholders are entitled to see this Register;
and also get a copy of it upon paying Rupee one.
(b) A copy of the shareholders register shall be forwarded to the
Company Registrar Office pursuant to the Nepal Company
law within Thirty days of Annual General Assembly
(Meetings) of the Bank.
Recovery of Loss
34. The Directors or the staffs (Karmachari) of the Bank shall not be
accountable for any compensation if any loss is caused while
performing their duty under their authority honestly and without any
mala fide intention (Chhalkapat).
Powers to frame Bye-laws (Upaneeyam)
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35. (a) The Board of Directors shall frequently(Barabar) fix the

provisions that the Bank shall invest such and such amount in
such and such sectors in the following matters. The Chief
Manager shall be responsible if more investment is made in
against of such provisions:
Total amount to be invested against the mortgage
(Bandhak) of Gold, Silver or Juharat for a period
(Bhaka) upto One year...................1
Total amount to be invested in Bill and
Discount...................2
Total amount to be invested against Chain (Sikri)
guarantee (Jamanat)...................................1
Total amount to be lended (Sarsapat) in the activities
of skill (Silpa) and factories against the guarantee
(Jamanat).............4
Total amount to be invested in as a quick recovery
loan.........5
Total amount to be invested in the security guaranteed
by the Government of Nepal, British or any other
foreign government......................................6
Total amount to be invested against the Dristibandhak
or Bhogbandhak of an un-damageable movable or
immovable property for a date (Bhaka) upto One
year..............................7
Total amount to be invested in other miscellaneous
activities..............................................................8
Particulars to be mentioned in the Half yearly and
Annual Report (Waslat).......................................9

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(b) The Board of Directors shall, on its discretion, issue Bye-laws

in the following matters, as and when necessary:
Maintaining the shareholders register.....................1
Norms of transmitting (Dakhel Kharej) the name of
the shareholders............................................2
Norms relating to the Annual General Assembly
(meetings) and committee meetings......................3
Norms for serving Notice to the shareholders by the
Bank........................................................................4
Norms regarding the change of share certificate in case
of loss or damage (Harai Parai).............................5
Issues managing for the pension and provident fund of
the Bank Personnel's and staffs (Nokaran)..................6
Functions relating to submission of proposal regarding
the pay and allowance of the Director General,
Director, Chief Manager or Manager in the
Shareholders Meetings and to follow the decision
thereof......................................................7
Norms to recruit or remove the employees and Staffs
of the Bank and fix and make changes in the
remuneration and allowances of them.......................8
Norms relating to recruitment of the other workers
(Kamdar) and Staffs (Karinda), fix their remuneration
and allowance and make any alteration (Ghadbad) on
it..........................9
Selections of other Bank workers (Kamdar) on
payment basis
Selection of Directors....................................10

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Norms relating to shareholders meetings and voting

method in the Board of Directors...........................11
Norms relating to letter of attorney and letter of
authority required for the Banking activities.............12
Norms relating to payment of bank loan and financial
security of the Bank...................................13
Norms relating to Bank seal..............................14
Rule making function to run the Branches of the Bank
to be established in different places.......................15
Norms related with for excellent running of the
Bank..........16
36. In the course of preparing a deed, lease (Patta), Kabuliyat, debenture
etc.; it shall be prepared and the Bank seal shall be affixed in front of
Director General and one of the Directors and signed by them
including the Chief Manager. No document shall be prepared and
caused to be prepared without following such a process.

Auditor
37. There shall be Two Auditors to audit the accounts of the Bank; one
of them shall be appointed by the Government and the next one shall
be selected by the shareholders. The auditor to be selected by the
shareholders shall be selected from the Annual General Meetings.
The remuneration of the Auditor shall also be fixed from the same
meeting.
(a) The Directors or employees (Karmachari) of the Bank shall
not be appointed (Mukarar) as an Auditor; provided that,
shareholders may be appointed as an Auditor.

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(b) The tenure of the Auditors, so appointed or selected, shall be

one year; they may be reappointed or reselected after the
expiry of their tenure.
(c) In the beginning, for the first time, both the Auditors shall be
appointed by the Government. Out of them, the Auditors to
be appointed by the shareholders shall remain in the post till
the date first Annual General Assembly (meeting) is held.
(d) If the post of the Auditor elected by the shareholders becomes
vacant before the expiration, the Board of Directors may
appoint till the meeting of the general Assembly is held.
38. The Government may depute Examiner (Janchaki) to check the
accuracy of the documents (Sayaha, Shresta) and ledgers (Khata
bahi) of the Bank.
(a) Bank employees shall have to handover the accounts
(Harhisab), ledgers (Khata Bahi) and documents to the
Auditors and Examiners (Janchaki) deputed by the
Government, if so requested.
39. The Auditor shall audit the Sayaha, Shresta, accounts and Waslat
and report the same along with the following particulars:
Whether the question asked or issues raised (Kaifiet Talab)
were answered or addressed or not and whether the response
was satisfactory or not....................................................1
Whether the Waslat so produced was accurate and upto the
mark or not...............................................................2
To prepare a report upon mentioning whether the Waslat so
prepared shows the actual financial condition of the bank or
not based on the Sayaha, Shresta and document examined
and the issue so raised.....................................................3

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Matters to be kept secret

40. The Director, Chief Manager, Manager, Auditor, Agent, Accountant
and other employees of the bank shall not make or cause to make
public any information of the Bank, which was done by them or
which they knew, except to the concerned employees. If someone
reveals any secret information of the Bank he/she shall be removed
from the post and shall also be liable for a punishment in accordance
with the degree of offence, if so proved.
Report on difficulties
41. The Board of Directors, if it deems necessary in the course of
running the business of the Bank pursuant this law face any
difficulties, shall report it before the Government with the consent of
the shareholders, for its correction.
Liquidation
42. In case there are reasons for the liquidation of the Bank, pursuant to
the Nepal Company Law, the Board of Directors shall report for the
same to the Government along with the consent of the shareholders.
The Bank shall not be liquidated without the approval (Ijajat) of the
Government even though the conditions of the Bank can not be
revamped at all.
43. The Council of Industry shall liaison the Bank with the Government
in the matters to be requested or reported as referred to in this Law.

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