Recovery of Debts of Banks and Financial Institution Act 2058 2002
Recovery of Debts of Banks and Financial Institution Act 2058 2002
(2002)
Date of Authentication and publication
1. Recovery of Debts of Banks and Financial Institutions (First Amendment) Act, 2063
Now, therefore, be it enacted by Parliament in the first year of reign of His Majesty
the King Gyanendra Bir Bikram Shah Dev.
Chapter-1
Preliminary
1. Short title and commencement:(1) This Act may be called " Recovery of
Debts of Banks and Financial Institutions Act, 2058(2002)".
2. Definitions: Unless the subject or the context otherwise requires, in this Act:-
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It came into force on 2060. 4.1 by a no tification published in the Nepal Gaze tte da ted 206 0.3.2.
(a) "Bank and financial institution" means a bank and financial institution
as referred to in Section 3.
(f) "Debt" means principal and interest of a debt lent by a bank or financial
institution to a borrower with or without security, mortgage of a
movable or immovable property or other necessary security or
guarantee, and this term includes arrears due and receivable from the off
balance sheet transactions or fee, commission and interest chargeable
therefor.
(h) "Debt recovery officer" means the officer specified pursuant to Section
28.
Provided, however, that the provisions of this Act shall not apply to the
recovery of a debt of which principal is less than five hundred thousand
rupees.
Chapter-2
Establishment and Formation of Tribunal and Appellate Tribunal
(4) The law member shall be the chairperson of the tribunal and, in
his/her absence; the banking member shall chair the tribunal.
(5) Notwithstanding anything contained elsewhere in this section,
Government of Nepal may, by a notification in the Nepal Gazette, add
territorial jurisdiction of the tribunal and give power to originally try and settle
cases relating to debt recovery.
Provided, however, that while appointing the banking member and the accounts
member, Government of Nepal shall consult Nepal Rastra Bank.
(a) For the law member, one who is incumbent or has already become or is
qualified to become a judge of the District Court,
(b) For the banking member, one who, having possessed at least bachelor’s
degree in economics or commerce, has at least ten years of experience
in a post of at least Class-Two officer level post in a bank or financial
institution established pursuant to the prevailing law.
(c) For the accounts member, one who, having possessed at least bachelor’s
degree in commerce or passed chartered accountancy or examination
equivalent thereto, has obtained the auditor certificate of at least “b”
class and gained at least ten years of experience in auditing of the bank
or financial institution sector.
7. Tenure of a Member: A member shall hold office for a period of five years
from the date of his/her appointment to the post and may be re-appointed.
10. Tenure of appeal hearing authority: The appeal hearing authority shall
hold office for a period of five years from the date of his/her appointment to
the post and may be reappointed.
11. Remuneration and facility: The remuneration and facilities and other
conditions of service of the member and the Appeal Hearing Authority shall be
as prescribed.
12. Vacation of seat: (1) The member or the Appeal Hearing Authority shall
cease to hold his office in the following circumstances:-
Chapter-3
Jurisdiction and Procedures of Tribunal and Appellate Tribunal
(4) If unanimity is not made while trying and settling a case in presence
of two members pursuant to Sub-section (3), the case shall be submitted for
action and settlement in presence of the absent member, as well.
(6) The appellate tribunal shall, following its establishment, have the
final power to hear appeal against any order issued by the tribunal under its
jurisdiction.
(a) Ample discussions and activities were held and carried out with
the borrower to settle, or cause to be settled, the debt.
(b) The bank and financial institution took adequate action on the
recovery of debt but the debt could not be recovered.
15. Filing of petition with tribunal: (1) If a bank or financial institution fails
to recover any amount recoverable from the borrower, it has to file a petition,
accompanied by the prescribed fees, in the prescribed format, to the tribunal
within the following time limit so as to have such amount recovered.
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Amendment by First Amendment .
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Amendment by First Amendment .
(3) No later than fifteen days of the date of receipt of the petition as
referred to in Sub-section (1), the tribunal has to issue a 15-day summons to the
defendant to file a note of defense in order to defend him/her accompanied by
proofs and evidence, and the defendant has to file the note of defense within
that time limit.
Provided, however, that if the defendant fails to file a note of defense within the
time limit because of occurrence of a circumstance beyond control and makes a
petition within 15 fifteen days thereafter, setting out reasons therefor, and if the
contents of such application appear reasonable, the tribunal may extend the time
limit not exceeding fifteen days.
16. Power to issue interim orders: (1) If, in respect of a case under its
consideration, the tribunal thinks, upon a petition of the party, that it is
necessary to so withhold the security furnished for borrowing the debt or the
movable or immovable property owned or possessed by, or title to which
belongs to, the guarantor of the borrower as to prevent such security or
property from being transferred, transmitted or sold, the tribunal may issue an
interim order to the concerned office to withhold such property until another
order is issued.
(2) It shall be the duty of the concerned office to observe the order as
referred to in Sub-section (1).
17. Period for trying and settling cases: The tribunal has to try and settle a
case filed under this Act no later than one hundred fifty days from the date of
submission of a note of defense where the note of defense is filed and from the
date of expiration of the time limit for the filing of a note of defense where
such note is not submitted.
Provided, however, that no case shall be tried and settled finally until the time
limit allowed for extending the expired time limit pursuant to Sub-section (3) of
Section 15 is expired.
18. To read out decision: (1) Decision made by the tribunal has to be read out
to the present parties or their attorneys and a deed has to be got executed by
them that they have heard the decision.
(2) If the concerned parties or their attorneys are not present at the
time of making decision, information of decision has to be sent to them within
seven days of making decision.
19. Appeal: (1) A party who is not satisfied with the decision made by the
tribunal may file an appeal, accompanied by the prescribed appeal fee, in the
prescribed format, to the concerned Appellate Tribunal within fifteen of receipt
of duplicate copy of the decision.
Provided, however, that if the defendant fails to file a note of defense within
that time limit because of occurrence of a circumstance beyond control and
makes a petition, setting out reasons therefore, the Appellate Tribunal may
extend a time limit of fifteen days.
23. Period for settling appeal: The Appellate Tribunal has to finally settle an
appeal made under this Act within ninety days from the date of submission of a
note of defense of appeal where such note of defense has been submitted and
from the date of expiration of the time limit for submission of a note of defense
where such note of defense has not been submitted and send information
thereof to the concerned tribunal no later than fifteen days from the date of
final settlement.
24. Powers and procedures of tribunal and appellate tribunal: (1) In
trying and settling cases filed under this Act, the tribunal and the appellate
tribunal may determine their procedures on their own, subject to this Act or the
Rules framed under this Act.
(2) In trying and settling cases filed under this Act, the tribunal or
the Appellate Tribunal shall have the same powers including to issue
summons, summon presence of petitioner, defendant, witness, administer oath,
take deposition, examine proofs, evidence and necessary documents or
statements, require submission of documents, require furnishing of security and
impose punishment as the court of law has under the prevailing law.
Chapter-4
Procedures of debt recovery
25. Procedures of debt recovery: (1) Upon receipt of an order of the tribunal,
the debt recovery officer has to recover the debt amount from the borrower
within the time limit specified in that order and get it provided to the concerned
bank and financial institution.
27. Order of debt recovery office to be equal to that of tribunal: (1) Any
order given by the debt recovery officer under this Act in respect of recovery
of a debt shall be equal to an order given by the tribunal, and it shall be the
duty of all the concerned to carry out such order.
(2) If any person disobeys any order given by the debt recovery
officer under this Act, the tribunal may institute contempt proceedings against
that person pursuant to Section 30.
Chapter-5
Miscellaneous
(2) The functions, duties and powers of the debt recovery officer
shall be as prescribed.
(2) If the tribunal holds that its contempt has been committed, it may
punish the accused with a fine not exceeding one thousand rupees or with
imprisonment for a term not exceeding one months or with both.
(3) If the Appellate Tribunal holds that its contempt has been
committed, it may punish the accused with a fine not exceeding five thousand
rupees or with imprisonment for a term not exceeding three months or with
both.
31. Payment of amount by bank and financial institution: (1) After a debt
has been recovered under this Act, the concerned bank and financial institution
have to pay one percent of the debt amount to the tribunal for the debt recovery
fee. In so paying the debt recovery fee by the bank and financial institution, it
has to pay only the amount that remains after deducting the amount paid by it
under Sub-section (2) of Section 15.
(2) The tribunal has to deposit the amount paid pursuant to Sub-
section (1) with the consolidated fund as prescribed by Government of Nepal.
32. Transfer of cases: The debt related cases falling under jurisdiction of this
Act and awaiting judgment by the District Court and the Appellate Court shall
be transferred to the concerned tribunal or appellate tribunal.
33. Power to frame Rules: Government of Nepal may frame necessary Rules in
order to implement the objectives of this Act.