directives nepal rastra bank

Topics: Capital requirement, Tier 1 capital, Banking Pages: 814 (101376 words) Published: November 9, 2013
UNIFIED DIRECTIVES
Issued by Nepal Rastra Bank to the Licensed Banks and
Financial Institutions, 2010

(Revised with inclusion of the Unified Directives, 2009 and the Circulars/Directives/Guidelines issued until July 16, 2010;
Effective from July 17, 2010)

NEPAL RASTRA BANK
CENTRAL OFFICE

BANKS AND FINANCIAL INSTITUTIONS REGULATION
DEPARTMENT
JULY 2010

Content
S. No.

Subject

Page
No

1.

Provisions Relating to Capital Adequacy

1

2.

Provisions Relating to Classification of Loans/advances and Loan Losses

45

3.

Provisions Relating to Single Borrower and Limitation of the Sectoral Credit and Facilities

67

4.

Provisions Relating to Accounting Policies and Format of Financial Statements

81

5.

Provisions Relating to Mitigation of Risks in Transactions of Licensed Institutions

182

6.

Provisions Relating to Good Corporate Governance

194

7.

Provisions Relating to Timeframe for Implementation of Regulatory Directives Issued in connection with Inspection and Supervision

213

8.

Provisions Relating to Investment

217

9.

Provisions Relating to Filing of Statistical Returns by Licenced Institutions to Nepal Rastra Bank

224

10.

Provisions Relating to Transfer or Sale of Promoters Shares of licensed institutions

289

11.

Provisions Relating to Consortium Financing

306

12.

Provisions Relating to Credit Information and Blacklisting

315

13.

Provisions Relating to Compulsory Reserve/Statutory Liquidity

358

14.

Provisions Relating to Opening of Branch/Offices

372

15.

Provisions Relating to Interest Rates

389

16.

Provisions Relating to Collection of Financial Resources

392

17.

Provisions Relating to Lending to Deprived Sector

401

18.

Provisions Relating to Amalgamation, Merger and Upgrading

411

19.

Provisions Relating to Know Your Customers

425

20.

Provisions Relating to Subsidiary Companies

433

21.

Miscellaneous Provisions

439

Nepal Rastra Bank
Central Office
Banks and Financial Institutions Regulation Department
Directive No. 1/067
Subject: Provisions Relating to Capital Adequacy Ratio

The following Directives with regard to the capital adequacy ratio to be maintained by a licensed institution have been issued having exercised the powers conferred by Section 79 of the Nepal Rastra Bank Act, 2002.

1.

The capital adequacy to be maintained
Based on its risk-weight assets, a licensed institution shall have to maintain the following capital adequacy ratio: Institution

Minimum capital fund to be maintained based on the
risk-weight assets (percent)
Core capital

"A" Class

6.0

10.0

"B" and "C" Class

5.5

11.0

"D" class
2.

capital fund

4.0

8.0

Capital fund
Capital fund means the aggregate of core capital and supplementary capital. In case of the licensed institution belonging to class "A", the calculation of capital fund shall be made as referred to in schedule 1.1 of the Capital Adequacy Framework, 2007 (updated in July, 2008) issued by this Bank.

3.

Classification of capital fund
For the purpose of calculation of capital fund, the capital fund of a licensed institution shall have to be classified in two categories as follows:1.

Core capital

1.1

The amount in the following heads shall be included/calculated in the core capital:a.

Paid up capital (ordinary share)

b.

Proposed bonus share
1

c.
d.

Irredeemable preference shares

e.

General Reserve Fund

f.

Accumulated Profit/loss

g.

Capital Redemption Reserve

h.

Capital Adjustment Fund

i.

Calls in advance

j.
1.2

Share premium

Other free reserves

The amounts in the following heads shall be deducted while calculating core capital:a.

Goodwill

b.

Amount invested in shares and securities of corporate bodies exceeding the limit imposed by this Bank.

c.

All amount...
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