Section 42: Capital Fund

1) A bank or financial institution shall have to maintain a capital fund in the ratio as prescribed by the Rastra Bank on the basis of its total assets or total risk-weighted assets. The Rastra Bank may, while prescribing such a ratio, also prescribe the ratio of the additional capital funds.

2) If any bank or financial institution fails to maintain the capital fund in accordance with sub-section (1), the Board of Directors of such bank or financial institution shall have to give information thereof to the Rastra Bank within one month.

3) The information given pursuant to sub-section (2) shall also be accompanied by, inter alia, the reasons for the failure to maintain the capital fund and the plans or programs prepared by the Board of Directors to increase the capital fund and restore it to the position as prescribed by the Nepal Rastra Bank.

4) On receipt of the information referred to in sub-section (2) and (3) , if the Rastra Bank deems the plan or program submitted by the Board of Directors reasonable, it may give a directive to the concerned bank or financial institution to implement such plans or programs. If any amendment or alteration is to be made in the proposed plans or programs, it may give a direction to the concerned bank or financial institution to amend or alter such plans or programs, stating the reasons for such amendment or alteration and to implement the same.