BNK 211

BANKING LAW

By
Ghana Shyam Shrestha
 Syllabus

Unit 1: Introduction
Unit 2: Central Bank and Legal System
Unit 3: Structure and formation of Bank and Financial
Institutions
Unit 4: Major Banking Law
Unit 5: Bank Regulation and Central Bank Policy for Bank and
FIs
Unit 6: Legal Provision Relating to Negotiable Instrument
Unit 7: Bank and Customer Relationship

Unit 8: Bank Lending and Securities

Unit 9: Legal aspect of Trade Finance:

Unit 10: Legal Challenges in Banking Business

Question Pattern

Group A: 6 question * 1 marks = 6 marks

Group B : 6 question * 3 marks = 18
Question Pattern marks
Group C : 4 question * 6 marks = 24
marks
Group D: 1 question * 12 marks = 12
marks
Chapter 1: Introduction
 Meaning and concept of bank and financial
institutions
 Evolution of banking institutions in Nepal
 Evolution of banking law in Nepal
 Role of banking institutions for socio-economic
development.
Meaning of Bank and Financial Institutions:

 Banks are financial institutions are depositary institutions

that collect deposits from savers and lend them to users of
funds.
 It is the financial intermediaries that help to transfer funds
from surplus units to deficit units.
 Bank and financial institutions is an formal organization
established by law that gets permission from the central
bank to do banking activities.
 Bank and financial institutions are licensed institution that
provide credit facility, accept deposits and provide different
financial services.
Meaning of Bank and Financial Institutions:

 “Bank” means a corporate body incorporated to carry on

financial transactions as referred to in Sub-section (1) of
Section 49 of BAFIA 2073
 “Financial Institution” means a corporate body
incorporated to carry on the transactions as referred to in
Sub-section (2), (3) or (4) of Section 49 of BAFIA 2073 ,
and this term also includes a development bank, finance
company or micro-finance development bank
Classification of Bank and financial institutions

 Nepal Rastra Bank classify the licensed institutions

as follows
 Class A: Commercial Bank
 Class B: Development Bank
 Class C: Finance company
 Class D: Micro-Finance financial institutions
 Infrastructure development bank
 Class A: Commercial Bank

 A commercial bank is a financial institution which

performs the functions of accepting deposits from
the general public and giving loans for investment
with the aim of earning profit.
 National level bank
 Carries out financial transaction as referred to in
sub-section (1) of section 49 of BAFIA 2073
 Minimum paid up capital: Rs. 8 billion
 Class B: Development Bank

 Development banks are the financial institutions engaged in the

promotion and development of industry, agriculture and other key
sectors.
 Development banks do not mobilize savings like commercial banks but
invest the resources in productive manner.
 Nepal Rastra Banks has classified the development banks into three
categories, national level, district level banks covering 4-10 districts
and district level bank covering 1-3 districts.
 Carries out financial transaction as referred to in sub-section (2) of
section 49 of BAFIA 2073
S.N. Types Minimum Capital requirement
1. National level 2.5 billion
2. District level covering 4-10 1.2 billion
district
3. District level covering 1-3 district 0.5 billion
THANK
YOU