Chapter-5 Fund, Accounts and Audit of Association

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Fund of Association: (1) The institution37 shall have a separate fund of its own, and the following amounts shall be credited to the fund:

(a) Amount received from the Government of Nepal or 38 native or foreign organization, institution etc. as a grant or loan,
(a1) 39 Amount received upon collecting the microsavings,
(a2) 40 Amount received from a commercial bank or financial institution,
(b) Amount as prescribed out of the fees received from the members of the Association,
(c) Amount of service charge received in consideration for the service provided by the institution,
(d) Amount including interest, fee received from the micro-credit.
(e) Amount received from any other source.
(2) All expenses made in the name of the institution shall be chargeable on the fund as referred to in Sub-section (1).
41Provided that, the amount collected from the micro-saving and received for the micro-credit shall not be spent for other purpose.
(3) 42 Amount of the fund shall be deposited in an account opened with any commercial bank or financial institution, and such account shall be operated as prescribed.
(4) 43 If there is a situation that the institution cannot disburse the micro-credit for the time being, the institution may, with the approval of the Bank, make investment in periodic deposits for a maximum period of six months.

Risk bearing fund: (1) The institution shall establish a separate risk bearing fund, in addition to the fund set forth in Section 24, for the purpose of bearing the possible loss and damage while disbursing the micro-credit, and the amount to be set as prescribed of the remaining total credit applied in the investment by the last day of each financial year shall be credited to this fund.
(2) The institution may invest the amount deposited in the fund pursuant to Sub-section (1) in the securities of the Government of Nepal or the Bank or periodic deposits of a commercial bank or financial institution44 .
(3) The amount deposited in the fund pursuant to Sub-section (1) shall be used only for the remission of the micro-credit. Where it is required to so remit the micro-credit, the institution shall obtain the approval of the Bank.

Accounts and audit of institution: (1) The institution shall maintain separate accounts of the activities relating to financial intermediation, and prepare a balance sheet for each financial year, and get the same audited by any recognized45 auditor appointed by the general meeting of the institution within Six months after the expiration of the financial year.
(2) In appointing an auditor pursuant to Sub-section (1), the same person or firm shall not be appointed for more than Three consecutive times.
(3) The remuneration of auditor shall be as specified by the general meeting of the institution.

(4) If the Bank so wishes, it may at any time examine or cause to be examined the accounts of the institution.

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