Section 42: Allocation of net loss

1) If the loss of the Bank exceeds in comparison to the profit in any fiscal year, the surplus net loss amount shall have to be allocated as follows:

(a) If revaluation profit is also included in the net loss, revaluation profit shall have to be kept in the revaluation reserve fund,

(b) If revaluation loss is also included in the net loss, revaluation loss shall have to be written as a loss in the revaluation reserve fund. If revaluation loss exceeds the amount remaining in the revaluation reserve fund, the surplus loss amount shall be written as a loss in the following fund and account in a sequence of priority:

(1) In the accumulated savings fund, up to the amount deposited in the accumulated savings fund,

(2) In the general reserve fund, if the loss amount remains after the adjustment in the accumulated savings fund as per sub-section (1), and

(3) In the capital account, if the loss amount remains after adjustment in the accumulated savings fund and the general reserve fund as per sub-sections (1) and (2).

(c) The operation, except for the revaluation profit as per Section (A) and revaluation loss as per Section (B), as well as other losses, shall have to be written as a loss in the accumulated savings fund,

(d) If the loss amount is more than the amount remaining as a deposit in the accumulated savings fund, the surplus loss amount shall have to be written in the following fund and account as a loss in a sequence of priority:

(1) In the general reserve fund, up to the amount deposited in the general reserve fund,

(2) In the capital account, if the loss amount remains after the adjustment in the general reserve fund as per sub-section (1),

2) The Government of Nepal shall bear the loss that could not be adjusted while allocating the loss as per sub-section (1).