How to Incorporate/Register banks or financial institution (Provisions relating to Incorporation of banks or financial institution)

Provisions relating to Incorporation of banks or financial institution:

• A person who is desirous of incorporating a bank or financial institution to carry on financial transactions pursuant to this Act may do so by getting such bank or financial institution registered as a public limited company in accordance with the laws in force.

• The authority empowered under the laws in force to register a company pursuant to Sub-section (1) shall register the same subject in Section 4.

Approval to be obtained to incorporate the bank or financial institution:

• For the purpose of incorporating a bank or financial institution under Section 3, the concerned person shall, before making an application for the registration of the bank or financial institution pursuant to the laws in force, make an application, accompanied by the following documents and the fee prescribed by the Rastra Bank, to the Rastra Bank for prior approval:

• (a) Memorandum of association of the proposed bank or financial institution;
• (b) Articles of association of the proposed bank or financial institution;
• (c) Feasibility study report of the proposed bank or financial institution;
• (d) Personal details of the promoters in the form prescribed by the Rastra Bank;
• (e) A certified copy of the agreement, if any, entered into between the promoters prior to the incorporation a bank or financial institution in relation to the incorporation of the bank or financial institution;
• (f) Evidence of tax clearance by the promoters up to the fiscal year immediately preceding the making of application pursuant to this Section;
• (g) Such other particulars and documents as may be prescribed by the Rastra Bank in relation to the incorporation of a bank or financial institution.

• If an application is made for prior approval pursuant to Sub-section (1), the Rastra Bank shall, if it finds appropriate to grant approval upon the examination of the submitted documents, grant its approval to incorporate such bank or financial institution within one hundred twenty days after the making of application, with or without prescribing any conditions. If there exists a ground for refusing to grant such approval, information thereof, accompanied by the reason for such refusal, shall be given to the applicant.

• If any foreign bank or financial institution makes an application under Sub-section (1) for the incorporation, under this Act, of a bank or financial institution in joint investment with a corporate body incorporated in the State of Nepal or with a citizen, or as a subsidiary company subscribing cent percent shares of the foreign bank or financial institution, the Rastra Bank shall grant approval for the incorporation of such bank or financial institution pursuant to Subsection(1).

Power to refuse to grant approval: The Rastra Bank may refuse to grant prior approval for the incorporation of a bank or financial institution in any of the following circumstances:

• (a) If the name of the proposed bank or financial institution is identical  with the name of any bank or financial institution which has already been registered and is still in existence;

• (b) If the name of the proposed bank or financial institution or the financial transactions to be carried on by it appears to be improper or undesirable in view of public interest, decency, etiquette, religion, nationalities or communities;

• (c) If the objectives of the proposed bank or financial institution are contrary to the laws in force;

• (d) If the incorporation of the bank or financial institution seems to be technically inappropriate

• (e) If a study of the feasibility study report, particulars and documents and information on other infrastructures submitted by the proposed bank or financial institution does not provide a ground to believe that it can carry on financial transactions in a healthy and competitive manner

• (f) If application for the registration of the memorandum of association and articles of association has not been made in the names of all promoter members of the proposed bank or financial institution;
• (g) If all promoters of the proposed bank or financial bank or financial institution have not signed the memorandum of association and articles of association, also set out their names and addresses, in the presence of any one witness, and the name and address of the witness has not been set out

• (h) If every promoter of the proposed bank or financial institution has not agreed to subscribe at least one share of that bank or financial institution

• (i) If every promoter of the proposed bank or financial institution has not clearly specified the number of shares to be subscribed by him or her while affixing his or her signature on the memorandum of association

• (j) If the fees required to be paid and the documents to be submitted pursuant to Section 4 have not been paid or submitted;

• (k) If any condition prescribed by the Rastra Bank is not fulfilled.

If the Rastra Bank refuses to register the memorandum of association and articles of association of the proposed bank or financial institution in any of the circumstances referred to in Sub-section (1), it shall give a notice thereof to the applicant