1. Issued Capital for General Public and Employees (Chapter 3, Section  9)
  • Every bank or financial institution shall set aside at least thirty per cent of its total issued capital for subscription by the general public. The bank or financial institution may set aside a maximum of five per cent of the shares so set aside for its employees. (BAFIA 2063)
  • The bank or financial institution may set a maximum of 0.5 % of the shares from remaining so set for its employees.
  1. Conversion of Promoters Shares into Public Shares
  • BAFIA 2073 has also a provision which allows conversion of promoter shares into public shares after a lock-up period of 10 years (Chapter 3, Section 11, Subsection 4)
  • Notwithstanding Clause 9 sub-section 1 and 2 Bank and Financial Institutions can convert its promoter shares into public shares after the commencement of 10 years with considering the situations of Capital Market , Banking and overall Financial sector. (Subject to NRB for prior approval)
  1. Provision related to Board of Directors ( Formation )
  • The Board shall consist of not less than five and not more than seven Directors. ( Chapter 4, Section  14) Conditions (Chapter 4, Section  15)
  • More than one member from same family are not eligible for BOD.
  • In case of Independent Directors person of his/her family who subscribed more than 1 % shares of concern BFI’s are not eligible for Independent Directors of BFI’s.
  • Same person does not eligible for different BFI’s Board of Directors.
  1. Provision related to Board of Directors (Qualification) ( Chapter 4, Section  16)
  • Having minimum 5 years experiences of BOD of foreign or national Banks and Financial institutions,
  • Or working experience of 3 years at officer level of Nepal Government.
  • Or minimum     Master    Degree     Qualification    in respective subjects prescribed by NRB.
  1. Provision related to Independent Directors (Qualification) (Chapter4,Section17)
  • For ‘A’ and ‘B’(National Level) Class BFI’s Graduated in respective subjects as prescribed by NRB.
  • For ‘B’ (Other except National Level) and ‘C’ Class BFI’s Undergraduate in respective subjects as prescribed by NRB.
  • For ‘D’ Class BFI’s qualification of Independent Directors as prescribed by NRB.
  1. Provision related to Board of Directors
  • Members of Parliament (MP) and Person having Constitutional Appointment are not eligible for Board of Directors and Chief Executive Officer (CEO) of BFI’s. (Chapter 4, Section 20)
  • BOD from other licensed institutions which mainly deals with deposits and Insurance transactions are not eligible for BOD of BFI’s at same time frame. (Chapter 4, Section 18, sub-section 5)
100 GB Free Backup
  1. Qualifications of Chief Executive Officer  (Chapter 4, Section 29, Sub-section 5)
  • Having gained at least Master Degree in Management, Banking, Finance, Monetary, Commerce, Statistics, Accountancy, Mathematics, Administration or Law.
  • Or having gained Bachelor Degree any one from above course or Chartered Accountant and 10 years of experiences.
  1. Tenure Of BOD and CEO In Case of BOD (Chapter 4, Section 15, Sub-section 1)
  • Independent Directors: – For Only One Tenure.
  • In Case of CEO (Chapter 4, Section 29, sub-section 2): First appointment is maximum for 4 years. Can reappoint for next one tenure. BOD have authority to fire CEO if performance is not satisfactory.
  1. Classification of Banks
  • Commercial Banks ‘A’ Class
  • Development Bank ‘B’ Class
  • Finance Companies ‘C’ Class
  • Laghubitta Bittiya Sanstha (Micro Finance Institutions)  ‘D’ Class
  • Infrastructure Banks (Chapter 7, Section 49, Sub-Section 5)
  1. Other Notable Changes
  • Remove the provision regarding Conversion of licensed institution of higher class into licensed institution of lower class (BAFIA 2063, Chapter 5, Section 37)
  • ‘D’ Class Microfinance banks are not allowed to write them as Bank. As per Chapter 7 section 49 sub-section 4 ‘D’ BFI’s will term as Laghubitta Bittiya Sanstha.
  • Voluntary Cancellation of BFI’s