Section 69: Bank or Financial institutions may be merged or acquisitioned

1) One bank or financial institution may be merged with another bank or financial institution, or one bank or financial institution may acquire another bank or financial institution by
fulfilling the procedures prescribed by this Act and the Nepal Rastra Bank Act.

2) A class “D” financial institution may be merged with, or such institution may acquire another institution of the same class.

Provided that an infrastructure development bank and a bank or financial institution may not be merged into each other, and none of them may acquire the other.

3) Notwithstanding anything contained elsewhere in this Chapter, in case any of the following circumstances are found from an Inspection and Supervision Report of the Rastra Bank, the Rastra Bank may order such bank or financial institution or any of its assets, liabilities, or business to merge or be merged into another bank or financial institution:-

(a) Capital fund is inadequate or financial position has been deteriorating for last three years,

(b) An act causing an adverse effect on depositor’s interests and liabilities towards depositors or such situation is prevailing,

(c) It is necessary to enhance the competitive capacity at the national and international levels for stability, development, and promotion of the state’s financial system.

4) Notwithstanding anything contained elsewhere in this Chapter, in case any of the following circumstances are found from an Inspection and Supervision Report of the Rastra Bank, the Rastra Bank may order such bank or financial institution to acquire or cause to be acquired another bank or financial institution, having stated the reasons thereof:-

(a) In case more than one bank or financial institution belonging to single group of persons, firms and companies are in operation and there is unhealthy financial relation,

(b) In case the rights and interests of the depositors, ordinary shareholders, and other customers could not be protected due to the negative impact if the bank or financial institution is operated in the status quo,

(c) System-based risks are increased, and the licensed institution is unable to pay its liabilities,

(d) In case shares have not been issued in the ordinary group within the prescribed time, the issued shares have not been sold or subscribed, or the prescribed minimum proportional paid-up capital has not been met,

(e) In case a bank or financial institution is subjected to actions of rapid reforms for three times or more or good governance has become weak due to the arising of frequent disputes in the Board of Directors of the bank or financial institution.

5) While issuing an order by the Rastra Bank pursuant to sub-section (3) or (4) for merger or acquisition of bank or financial institutions, it may specify the procedures thereof in such order.