part 4

64 62. Auditing: (1) A bank or financial institution shall, within four months from the date of completion of the Fiscal Year, have to prepare the balance sheet, profit and loss account, cash flow statement and other financial statements in the formats and according to the methods specified by the Rastra Bank and get the external audit conducted. Such financial statement shall have to be signed by at least two Directors, Chief Executive and the auditor. Provided that it shall be as prescribed by the Rastra Bank in case of a branch office of a foreign bank or financial institution carrying on financial transactions by getting approval from the Rastra Bank. (2) In case the bank or financial institution not completing the auditing within the period referred to in Sub-Section (1) makes a request for extension of time for auditing stating reasonable cause, the Rastra Bank may extend the period upto two months. (3) The external auditor shall have to submit the report of auditing to the concerned bank or financial institution and the Rastra Bank as well. 63. Appointment and Remuneration of Auditor: (1) General Meeting of a bank or financial institution shall appoint an auditor. (2) The General Meeting shall not appoint the same auditor for more than three consecutive times. (3) While appointing an auditor pursuant to Sub-Section (1), the General Meeting shall appoint a Chartered Accountant in the case of a licensed bank or financial institution of Class “A” or “B” or “C”, and a Chartered Accountant or a Registered Auditor in the case of a bank or licensed bank or financial institution of Class “D”. (4) In case any bank or financial institution does not or could not appoint auditor pursuant to Sub-Section (1), the Rastra Bank may appoint the auditor..

65 (5) In case the position of Auditor falls vacant for any reason whatsoever, the Board of Directors shall appoint another Auditor for the remaining period. (6) The remuneration of an auditor of a bank or financial institution shall be as determined by the Rastra Bank in case the auditor has been appointed by the Rastra Bank; as determined by the General Meeting in case the Meeting has appointed and as determined by the Board of Directors, in case the Board has appointed the Auditor. 64. Ineligibility for Appointment as Auditor: Any of the following persons or any firm, company or institution in which such person is a promoter or partner shall not be eligible to be appointed as an auditor of a bank or financial institution: - (a) A promoter, Director, Chief Executive of a bank or financial institution or his\her family member, (b) An official, employee or internal auditor of the bank or financial institution, (c) A person working as a partner of any promoter, Director or employee of the bank or financial institution, (d) A borrower of the bank or financial institution, a person with significant ownership or relevant person or person having financial interests, (e) A person who has been declared bankrupt in Nepal or abroad, (f) A person, firm, company or institution having subscribed one percent or more shares of the bank or financial institution, (g) A person, who has been punished in any criminal offense by the court and a period of five years has not been lapsed after he\she has served the punishment, (h) A person, who is disqualified to become an auditor according to prevailing laws..

66 (2) If any person appointed as auditor of bank or financial institution is found to be ineligible pursuant to Sub-Section (1), his/her appointment shall be deemed to have been ipso facto invalid. 65. Details to be Furnished: (1) A bank or financial institution shall, at all times, provide all such accounts, records, books, ledgers and other statements as demanded by the auditor in the course of performing audit. (2) For the purpose of Sub-Section (1), the officer, responsible for providing accurate statement or answer as demanded, shall also have to furnish forthwith accurate statement or answer to the queries made by the auditor. 66. Functions, Duties and Powers of Auditor: (1) The functions, duties and powers of the auditor shall be as follows:- (a) To conduct auditing of accounts and financial statements, (b) To prepare audit report by including audited accounts, balance-sheet, and profit and loss accounts and to produce it before the Board of Directors of the bank or financial institution, (c) If it is found that there are irregularities committed in the activities of the bank or financial institution or works are not being carried out in appropriate manner and such matters will cause harms or loss to the bank or financial institution, to inform the same to the Board of Directors, (d) To inform the Rastra Bank, if any of the following situation is like to emerge:- (1) Violation of the terms and conditions as prescribed by the Rastra Bank during issuance of the license or this Act or Rules, Byelaws, Directives framed under this Act, (2) To cause adverse effect on regular activities of the bank or financial institution, (3) To prohibit the auditor to submit the audit report or asking to prepare false audit report..

67 (2) The auditor shall have power to inspect all documents concerning accounts including ledger, books, account, voucher, and goods at any time and the auditor may seek answers or explanations from a Director or official of a bank or financial institution on matters required by him/her in the course of performing his/her duties and carrying out his/her functions in appropriate manner. (3) The auditor shall have to include the following matters in his/her report clearly:- (a) Whether or not replies to the queries as per the demand were provided, (b) Whether or not the balance sheet, off-balance sheet transactions, profit and loss account, cash flow statement and other financial statements, as well, have been prepared in such format and in accordance with such procedures as prescribed by the Rastra Bank, and whether or not they actually matched with the accounts, records, books and ledgers maintained by the bank and financial institution, (c) Whether or not the accounts, records, books and ledgers have been maintained accurately in accordance with prevailing laws, (d) Whether or not any official of the bank or financial institution has committed any act contrary to the prevailing laws or committed any irregularity or caused any loss or damage to the bank or financial institution, (e) Whether or not credits have been written off as per the Credit Write-off Byelaws or directives of the Rastra Bank, (f) Whether or not the transactions of the bank or financial institution have been carried on in a satisfactory manner as prescribed by the Rastra Bank, (g) Matters to be informed to the shareholders,.

68 (h) Matters prescribed by the prevailing laws and other matters as prescribed by the Rastra Bank to be mentioned in audit report by the auditor, (i) Other suggestions which the auditor deems necessary to be furnished. (4) Upon receipt of the audit report, the Rastra Bank may order the auditor of the bank or financial institution to carry out the following additional functions:- (a) To submit additional information as required by the Rastra Bank concerning auditing, (b) To make more expand the areas of auditing of the bank or financial institution or its subsidiary company, (c) To carry out other tests as recommended to the bank or financial institution or as required by the Rastra Bank in any particular subject. 67. Recommendation for taking actions against Auditor: (1) The Rastra Bank shall write to the concerned regulating authority to remove name of an auditor, who does not perform his/her duties as per this Act, from the panel of the auditors subject to prohibit him/her to carry out audit of any bank or financial institution for one year to three years. (2) In case of recommendation pursuant to sub-section (1), the concerned regulating agency shall have to take actions against such auditor as per the prevailing laws. 68. Auditor to certify: The auditor shall mark the accounts, records, books and ledgers audited by him/her by affixing his /her signature thereon and also mentioning therein the date on which he/she has audited them. Chapter-10 Provisions on Merger and Acquisition of Bank or Financial Institutions.

69 69. Bank or Financial institutions may be merged or acquisitioned: (1) One bank or financial institution may be merged with another bank or financial institution or one bank or financial institution may acquire another bank or financial institution by fulfilling the procedures prescribed by this Act and the Nepal Rastra Bank Act. (2) A class "D" financial institution may be merged with or such institution may acquire another institution of the same class. Provided that, an infrastructure development bank and a bank or financial institution may not be merged into each other and none of them may acquire the other. (3) Notwithstanding anything contained elsewhere in this Chapter, in case any of the following circumstances is found from an Inspection and Supervision Report of the Rastra Bank, the Rastra Bank may order such bank or financial institution or any of its assets, liabilities, or business to merge or be merged into another bank or financial institution:- (a) Capital fund is inadequate or financial position has been deteriorating for last three years, (b) An act causing adverse effect on depositor's interests and liabilities towards depositors or such situation is prevailing, (c) It is necessary to enhance the competitive capacity at national and international level for stability, development and promotion of the financial system of the state. (4) Notwithstanding anything contained elsewhere in this Chapter, in case any of the following circumstances is found from an Inspection and Supervision Report of the Rastra Bank, the Rastra Bank may order such bank or financial institution to acquire or cause to be acquired another bank or financial institution, having stated the reasons thereof:-.

70 (a) In case more than one bank or financial institution belonging to single group of persons, firms and companies are in operation and there is unhealthy financial relation, (b) In case rights and interests of the depositors, ordinary shareholders, and other costumers could not be protected due to the negative impact, if the bank or financial institution is operated in the status quo, (c) System-based risks are increased and the licensed institution is unable to pay its liabilities, (d) In case shares have not been issued in the ordinary group within the prescribed time, the issued shares have not been sold or subscribed, or the prescribed minimum proportional paid up capital has not been met, (e) In case a bank or financial institution is subjected to actions of rapid reforms for three times or more or good governance has become weak due to arising of frequent disputes in the Board of Directors of the bank or financial institution. (5) While issuing order by the Rastra Bank pursuant to sub-Section (3) or (4) for merger or acquisition of bank or financial institutions, it may specify the procedures thereof in such order. 70. Application to be submitted for Merger or Acquisition: (1) In case any bank or financial institution desires to be merged into another bank or financial institution, two or more bank or financial institution/s so desiring to merge or be merged shall have to decide the matter first from their respective Board of Directors and submit joint application to the Rastra Bank for theoretical approval stating the following matters:- (a) Necessity of and justification for merger of the bank or financial institutions and general projection of the impact it is likely to cause in the banking and financial sector and fiscal system,.

71 (b) Latest auditor's report of bank or financial institutions to merge or be merged including the audited balance-sheets, profit and loss account, cash flow statement and net worth and so on, (c) Provisions made for protection of interests of the creditors of the bank or financial institutions to merge or be merged, (d) Actual report of movable and immovable assets of the merging bank or financial institutions and period of payment of liabilities, (e) Details of management of employees of the merged or merging bank or financial institutions, (f) Approval process under the laws concerning company and securities; (g) Preliminary agreement concluded for merger by the institutions; (h) Other details as prescribed by the Rastra Bank. (2) In case any bank or financial institution desires to acquire another bank or financial institution, the concerned two or more banks or financial institutions shall have to decide the matter first from their respective Board of Directors and submit joint application to the Rastra Bank for theoretical approval stating the following matters:- (a) Necessity of and justification of acquisition of the bank/s or financial institution/s and general projection of the impact it is likely to cause in the banking and financial sector and fiscal system, (b) Latest auditor's report of the principal institution and of the target institution/s including the audited balance-sheets, profit and loss account, cash flow statement and net worth and so on, (c) Provisions made for protection of interests of the creditors of the bank or financial institutions to be acquired, (d) Approval process under the laws concerning companies and securities, (e) Preliminary agreement concluded for acquisition of the bank or financial institution,.

72 (f) Other details as prescribed by the Rastra Bank. (3) The Rastra Bank shall inquire into the application submitted pursuant to Sub-Section (1) or (2) and in the course of the inquiry, the Rastra Bank may ask for discussions with the applicants as may be necessary and ask for additional documents. (4) If the Rastra Bank is satisfied upon inquiry carried out pursuant to Sub- Section (3) that the merger or acquisition would not have any negative impact on the development of banking and financial system of the country and in fair competition and compliance of the prevailing laws, it may give theoretical consent for moving ahead the process of merger or acquisition and while giving such approval, it may prescribe additional conditions or issue additional directives. 71. Provisions concerning Valuation of Assets and Liabilities:(1) Upon obtaining theoretical approval of merger of bank/s or financial institution/s pursuant to Section 70, such bank/s or financial institution/s shall have to appoint, on mutual consent a person, firm, company or institution that is at least capable for auditing of bank for valuation of their respective assets, liabilities, and transactions and information thereof must be furnished before the Rastra Bank. Provided that, the bank or financial institutions may carry out such valuation to be conducted before submitting application to the Rastra Bank. (2) Upon obtaining theoretical approval to acquire a bank or financial institution pursuant to Section 70, the target institution shall have to get the auditing of its assets, liabilities and transactions through an auditor appointed by the General Meeting or by the Board of Directors under the authority of the General Meeting. (3) The acquiring institution may also conduct comprehensive valuation of the assets and liabilities of the target institution..

73 (4) In case the Rastra Bank does not find actions of the Valuator appointed pursuant to sub-Section (1) or (2) credible, it may remove him/her and order to concerned bank or financial institution to appoint another valuator. (5) The terms and conditions of services of the valuator shall be as determined by the concerned bank or financial institution. (6) While valuating the assets, liabilities, net worth, and overall transaction by the valuator, it has to be carried out according to the established norms, bases and procedures. (7) The Rastra Bank may issue necessary directives as to the methods of valuation, bases of valuation and scope thereof. 72. Provisions on Agreement: Unless otherwise ordered by the Rastra Bank according to this Act, the banks or financial institutions having obtained theoretical approval of merger or acquisition shall have to enter into an agreement having stated the following matters:- (a) Provisions concerning protection of interests of depositors, creditors and shareholders, (b) Provisions concerning valuation system and matching of assets and liabilities of bank or financial institutions, (c) Provisions concerning management of investment and transaction, inter-agency ownership and inter-agency give and take, guarantee and assurance, management of non-banking transaction, assets and liabilities, (d) Merger, merging and acquisition processes, the time to be taken and costs to be incurred, (e) Operation and management structure and name list of Directors, (f) Matching of levels of employees of both institutions, or of the principal institution and of the target institution/s getting theoretical.

74 approval for merger or acquisition and matching of terms and conditions of services, (g) Details of the shareholders with substantial ownership and of other shareholders, (h) If the bank or financial institutions to be merged or acquired as a new bank or financial institution, the name, Memorandum of Association and Articles of Association, capital structure, restructuring and class, (i) In case of foreign bank or financial institution, the letter of approval from the concerned regulating agency, (j) In case of foreign bank or financial institution, matters as to whether or not acquire the business of bank or financial institutions in Nepal or sell entire business of such bank or financial institutions in Nepal, (k) Grievance handling system of stakeholders, (l) The prevailing laws and process for its compliance, (m) Other necessary details required by the Rastra Bank. 73. Provisions on Approval:(1) The bank or financial institutions obtaining theoretical approval for initiating merger or acquisition process shall have to adopt special resolutions from their respective General Meetings and shall submit joint application to the Rastra Bank having attached therewith the agreement referred to in Section 72 and other matters prescribed by the Rastra Bank for final approval. (2) While carrying out inquiry into the application submitted pursuant to Sub-Section (1), the Rastra Bank, if it deems necessary, may ask for additional information or documents to concerned bank or financial institution. (3) While carrying out enquiry pursuant to Sub-Section(1) and (2), the Rastra Bank may give due consideration to the facts that whether or not the merger of the bank or financial institutions would create healthy competition in the financial sector of the country, whether or not monopoly or controlled practice of any bank or financial institution emerges; whether or not serious negative impact would cause in the financial market and depositors and also having conducted fit.

75 and proper test of the promoter/s who may has/have significant ownership in the institution to be created after the merger. After completion of the enquiry, Rastra Bank may grant final approval to the bank or financial institutions for merger or acquisition by prescribing any terms and conditions and or limitations. (4) The Rastra Bank shall, if it has not found to be appropriate to grant approval pursuant to Sub-Section (3), notify the concerned bank or financial institution along with reasons thereof within forty five days. (5) In case it would be difficult for the institutions obtained approval pursuant to Sub-Section (3) to comply with the provisions of this Act and directives of Rastra Bank due to merger or acquisition, the Rastra Bank may give privilege as prescribed on the basis of necessity and rationality. (6) Other provisions concerning merger and acquisition shall be as prescribed by the Rastra Bank. 74. Transactions may be acquired: With prior approval of the Rastra Bank, any branch, office of any bank or financial institution or any property or transaction thereof may be acquired by, or transferred to, any other bank or financial institution on mutual consent. Chapter-11 Voluntary Liquidation of Banks or Financial Institutions 75. Voluntary Liquidation of Bank or Financial Institution: (1) Any bank or financial institution willing to voluntary liquidation shall have to submit an application along with an action plan of voluntary liquidation. (2) In case the Rastra Bank is confident, upon an inquiry on the application submitted pursuant to Sub-Section (1), that such bank or financial institution or a branch or office of a foreign bank or financial institution is fully capable of paying all.

76 of its credits and liabilities, the Rastra Bank may grant theoretical consent, along with some terms and conditions, for voluntary liquidation. (3) The bank or financial institution obtaining theoretical approval from the Rastra Bank pursuant to Sub-Section (2) shall have to carry out following functions:- (a) To inform the Office of the Companies Registrar about obtaining theoretical approval within seven days from the date of obtaining; (b) To send notice to all depositors, creditors or concerned persons by fast, efficient and reliable means, about obtaining theoretical approval within thirty days from the date of obtaining; (c) To publish notice in national newspapers about obtaining theoretical approval within thirty days from the date of obtaining; (d) To carry out other acts as prescribed by the Rastra Bank. 76. Initiation of Voluntary Liquidation :(1) The process of initiation of voluntary liquidation of bank or financial institution shall be deemed to have been initiated from the date of grant final approval for voluntary liquidation by the Rastra Bank. (2) The bank or financial institution obtaining theoretical approval for voluntary liquidation pursuant to Section 75 shall have to complete the following acts before obtaining final approval of the voluntary liquidation from the Rastra Bank:- (a) All the deposits and liabilities have to be refunded or fulfilled within the set time-limit, (b) Operation of transactions has to be closed down and no new transaction to be carried on, (c) Exercise of other powers, except those essential for voluntary liquidation, shall not be allowed. (3) The Rastra Bank may issue necessary directives in the course of carrying out functions pursuant to Sub-Section (2)..

77 (4) In case a person entitled to get payment of the amount and other liabilities pursuant to Clause (a) of Sub-Section (2) does not come to receive the payment within the prescribed time-limit, the said amount shall be deposited to the account as directed by the Rastra Bank. (5) The approval of voluntary liquidation will not cause any type of adverse effect on the rights and interests of the depositors and other creditors. (6)The bank or financial institution opting voluntary liquidation shall, upon completion of the proceedings of this Act, have to submit to the Rastra Bank an auditing report of such bank or financial institution. (7) The Rastra Bank shall grant final approval for voluntary liquidation to the bank or financial institution that accomplished the function as referred in this Section. The Rastra Bank shall revoke the license of carrying out banking and financial transaction. (8) The amount to be paid by the bank or financial institution opting to voluntary liquidation for the deposits not claimed at the moment shall have to be separately retained as directed by the Rastra Bank. 77. No Change in Liability: There shall be no change in the liability of any shareholder, Director, Chief Executive, official, employee or other person arising out of this Act or any other prevailing laws due to liquidation of any bank or financial institution under this Chapter. Chapter-12 Provisions on Mandatory Liquidation of Bank or Financial Institutions 78. Application may be filed before the Court for Mandatory Liquidation of Bank or Financial Institution: (1) The Rastra Bank may file an application to the court for.

78 mandatory liquidation of any bank or financial institution under this Chapter and notice of application of such action shall be published in a daily newspaper of national level. (2) The Rastra Bank shall include the following documents along with the application filed before the court for initiation of the process of liquidation of any bank or financial institution pursuant to Sub-Section (1):- (a) Details along with reasons for mandatory liquidation of the bank or financial institution that the situation referred to in Section 78 is prevailing, (b) Financial statement of the bank or financial institution. (3) Notwithstanding anything contained in Sub-Section (1), any of the following persons may, with prior approval of the Rastra Bank, file application to the court by mentioning the grounds to show the situation that a bank or financial institution may be subjected to mandatory liquidation pursuant to Section 79 :- (a) Joint application of the depositors having representation of more than 25 percent of the total deposit, who do not get the payment of the payable deposits or of more than one percent of the depositors, (b) The person competent to file application for mandatory liquidation according to the prevailing law relating to insolvency. (4) In case the court orders for initiation of the process of liquidation of a bank or financial institution based on the application referred to in Sub-Section (1) or (3), the process of mandatory liquidation of the bank or financial institution shall be commenced from the date of passing of such an order. 79. Circumstances leading to Mandatory Liquidation of Bank or Financial Institution: The bank or financial institution may be subjected to mandatory liquidation in following circumstances:-.

79 (a) In case the matured deposit or the deposit to be repaid immediately or other financial liability could not be paid on time and is due, (b) In case capital fund of the bank or financial institution is negative, (c) In case the Rastra Bank recommends for liquidation of a bank or financial institution based on an inspection report of the bank or financial institution, (d) In case the shareholders with significant ownership or officials of a bank or financial institution frequently commit acts causing obstruction against the rights and interests of the depositors for the development of financial system, (e) In case of frequent violations of the this Act and directives given by the Rastra Bank, (f) In other situations as determined by the Rastra Bank for mandatory liquidation of banks or financial institutions. 80. Transaction to be Suspended:(1) Immediately after submission of the application to the court pursuant to Section 78 for mandatory liquidation of a bank or financial institution, the Rastra Bank shall suspend entire financial transactions of such bank or financial institution. (2) The Rastra Bank may, while issuing order for suspension of financial transactions pursuant to Sub-Section (1), revoke the license of such bank or financial institution. 81. Appointment of Liquidator: (1) Court may issue an order to the Rastra Bank to make recommendation for appointment of liquidator for initiating process of mandatory liquidation of any bank or financial institution. (2) In case the court issues order pursuant to Sub-Section (1), the Rastra Bank shall recommend names of at least three persons for appointment to the Liquidator within fifteen days..

80 (3) While making recommendation to the court by the Rastra Bank pursuant to Sub-Section (2), the persons having experience of the banking and financial sector from amongst the licensed insolvency practitioners according to the prevailing laws have to be recommended. (4) The court may appoint one of the three persons recommended pursuant to Sub-Section (2) as the liquidator. (5) After appointment of the Liquidator pursuant to Sub-Section (4), the Board of Directors of such bank or financial institution shall be deemed to have been ipso facto dissolved and unless otherwise ordered by the Liquidator, services of entire officials and employees appointed by the bank or financial institution shall ipso facto be terminated. (6) In case the Liquidator appointed pursuant to Sub-Section (4) resigns, he/she dies or the Rastra Bank deems that he/she is incompetent to perform the prescribed works, the Rastra Bank shall file application the court according to this Section to appoint another Liquidator by removing such liquidator. (7) Remuneration and terms and conditions of services of the liquidator shall be as prescribed by the court on the recommendation of the Rastra Bank. 82. Functions, Duties and Powers of Liquidator:(1) The liquidator appointed for the purpose of initiating the process of mandatory liquidation of bank or financial institution shall, after his/her appointment, carry out the following actions:- (a) To publish a notice in a national level Nepali and English daily newspaper for information of shareholders and other concerned persons of the bank or financial institution within 15 days of the appointment, (b) To send to the Office of the Company Registrar and the institution established as per the prevailing laws for guarantee of deposits for.

81 information with an authenticated copy of the order of mandatory liquidation within 15 days of the appointment; (c) To post or cause to be posted a copy of such order in a conspicuous manner at the principal place of business of the bank or financial institution and at each of its offices, (d) To broadcast the notice through a national level television and radio for four weeks at least once in a week after the appointment, (e) To carry out other works prescribed by the Rastra Bank. (2) After getting information as referred to in Clause (b) of Sub-Section (1), the Office of the Company Registrar shall make record on the concerned registration book that the order of initiating the process of mandatory liquidation has been made. (3) In addition to the functions, duties and powers as referred to elsewhere in this Act, the functions, duties and powers of the liquidator, subject to the directives of the Rastra Bank, shall be as follows:- (a) To take responsibility of the office, books and accounts, records and assets of the bank or financial institution, (b) To carry on most essential regular works of operation and management of the bank or financial institution, (c) To carry on all the functions to be carried out on behalf of or in the name of the bank or financial institution, (d) To appoint employees to render assistance in own works, (e) To make necessary expenses for operation, management and liquidation of the bank or financial institution, (f) To make coordination with institutions established by the prevailing laws for security of deposits, (g) To exercise all the powers to be exercised by the shareholders, General Meeting, Board of Directors and officials of the bank or financial institution,.

82 (h) To carry out inquiry to the business and financial status of the bank or financial institution, (i) To merge or transfer entire or some of the assets and liabilities of the bank or financial institution to another bank or financial institution by getting approval of the Rastra Bank, (j) To get credit in security of the assets of the bank or financial institution, (k) If it is deemed that it will be beneficial for the bank or financial institution by selling any assets or terminating any contract or liability, to sell such assets or to terminate such contract or liability, (l) To procure services of professional and qualified persons to assist for own functions as may be necessary, (m) To hold necessary discussions and enter into compromise with any creditor or borrower of the bank or financial institution, (n) To collect, protect and sell the assets of the bank or financial institution and to distribute according to this Act, (o) To inquire whether or not a Director, official, employee, or any other person has committed fraud, cheating, or misrepresentation against the bank or financial institution or depositors or creditors and to take necessary legal actions against them or to file any case or initiate legal action on behalf of the bank or financial institution or to defend on behalf of the bank or financial institution, (p) If anyone has been using property of the bank or financial institution, to withdraw it or to take legal actions to get such property back or cash amount from the transaction which has been declared invalid, (q) To prepare report in every three months on the actions taken in the course of liquidation in the format as prescribed by the Rastra Bank and to submit the report to the Court and Rastra Bank, (r) To carry out all other functions as required for liquidation of bank or financial institution,.

83 (s) To carry out other functions as prescribed by the Rastra Bank. (4) In case any difficulty or hurdle arises while exercising any power by the Liquidator under this chapter, he/she may file application to the court to remove such hurdles or difficulty. (5) In case the reasons stated in the application submitted pursuant to Sub- Section (4) are found to be appropriate, the Court may issue appropriate order. 83. Effects of Order Relating to Liquidation: (1) In case the court orders for initiating the process of mandatory liquidation of any bank or financial institution, the order results in the following on the following matters:- (a) In case any limitation is expired as to any claim or right of the bank or financial institution, the limitations of such claims or rights shall ipso facto be deemed to be extended for six months from the date of issuing the order by the court to initiate the process of mandatory liquidation. (b) Except in the situation as mentioned in Clause (c), if any property or assets of the bank or financial institution has been under impediment for any reason whatsoever, or such property is pledged for any credit availed to the bank or financial institution, such property or asset shall ipso facto be released. (c) The functions concerning accepting deposits and lending credits shall ipso facto be stopped. (d) Case proceedings against the bank or financial institution in any court shall ipso facto be stopped and unless otherwise ordered by the court, court proceedings against such bank or financial institution shall not be revived. Provided that in case there is any case sub-judiced at the Supreme Court as to the bank or financial institution, or it is necessary to seek.

84 clearance from the Supreme Court, the Rastra Bank shall file an application to that Court. (e) No interests or any type of additional charge shall be levied in the liabilities of the bank or financial institution. (f) Share of such bank or financial institution shall not be transferred, mortgaged or alienated. Provided however that the act of transfer, mortgage or alienation may be done with prior approval of the Rastra Bank. (2) In case the Liquidator comes to know from any source that any action carried out before six months from the date of passing the order by the court to initiate process of mandatory liquidation causes harm or loss to the interests of the depositors or creditors of the bank or financial institution, the Liquidator shall submit an application about it to the court and information thereof shall also be given to the Rastra Bank. (3) In case the court finds from the application submitted pursuant to Sub- Section (2) that any of the following actions carried out, the court may declare such action null and void:- (a) If decision to offer presents is made, (b) If any act causing loss to the right and interests of the creditors or depositors is committed, (c) If payment is made or transferred before repayment of credits or the collateral is released, transferred or alienated before expiry of the term of the credit, (d) If the bank or financial institution has to suffer more liability in the course of any transaction or contract than that is normally prevailing practice,.