Section 57: Provisions on Recovery of Credit

1) Notwithstanding anything contained in the deed of loan or in the prevailing Nepal law, the bank or financial institution may recover its principal and interests, having sold by auction the assets taken or put as mortgaged by the borrower in the name of the bank or financial institution, if the borrower fails to abide by the terms of the credit as mentioned in the deed or agreement or any terms and covenants made with a bank or financial institution or fails to repay credit to the bank or financial institution within the time-limit stipulated in the deed, or if the bank or financial institution is found, through the monitoring conducted pursuant to Section 56, that it has misused the credit by using it for the purpose other than the purpose for which it was disbursed.

2) Notwithstanding anything contained in the prevailing law, in case the borrower gives off the title in any manner whatsoever over the assets mortgaged collateral security or the value of assets mortgaged as collateral security to the bank or financial institution is decreased, the bank or financial institution may ask such borrower to place more assets as collateral security within the time limit specified by it, and the borrower shall have to put additional collateral security within the time-limit prescribed by the bank or financial institution.

3) In case the borrower fails to place more assets as collateral within the time limit pursuant to sub-section (2) or the principal and interests cannot be recovered from the collateral security so mortgaged, the bank or financial institution may recover its principal and interests from the movable or immovable assets under the ownership or title of the borrower according to the prevailing laws.

4) In case any amount remains after deducting the amount realized from auction sale or other provisions under this Section from the amount of expenses and the amount of principal and interests of the bank or financial institution, such remaining amount shall have to be refunded to the concerned borrower.

5) The bank or financial institution shall write to the concerned office to register or transfer the ownership of the assets so auctioned as per this Section in the name of the person accepting the auction in accordance with the prevailing law.

6) In case the bank or financial institution writes for registering or transferring the ownership of the assets pursuant to Sub-Section (5), notwithstanding anything contained in the prevailing laws, the concerned office shall have to register or transfer the ownership of the assets as requested.

7) In case no one accepts the movable or immovable assets while carrying out an auction by the bank or financial institution under this Section, the bank or financial institution shall take into its ownership such assets as prescribed.

8) The bank or financial institution shall write to the concerned office to register or transfer the ownership of the assets it has taken into its ownership pursuant to sub-section (7). In case such a request is received, the concerned office shall, notwithstanding anything contained in the prevailing laws, register or transfer the ownership of the assets in the name of the concerned bank or financial institution.
9) In case the then owner denies to, or obstructs in, possessing the property accepted by any person or a bank or financial institution and the party accepting the auction has the right to enjoy the assets according to laws, the concerned body of Government of Nepal shall take action to cause to possess of said property as per the prevailing law.

10) The licensed institution shall not be entitled to suspend the recovery process of the credit written off subject to the prevailing Credit Write-off Byelaws.

11) In case a borrower does not repay the credit from a bank or financial institution and the interests accrued thereto and penal interests within the time limit stipulated in the deed of the credit or the contract, the bank or financial institution shall have to write to the Credit Information Bureau Limited to blocklist such borrower according to the prevailing laws.

12) In case the credit could not be recovered even after taking actions against the borrower under this Section, the bank or financial institution may, for the purpose of recovering such credit amount, take actions for recovery of the credits according to the prevailing laws including the freezing of any assets of the borrower located in a foreign country.

13) In case the credit cannot be recovered even after taking all actions under this Section, the concerned bank or financial institution may request the Rastra Bank to make necessary provisions to withhold or confiscate the passport/s of the concerned borrowers and to deprive the concerned borrower of availing the services to be made available by the state. Upon receipt of such request, Rastra Bank shall have to forward the request to the Government of Nepal for necessary actions along with its opinion.

14) The taking actions by any bank or financial institution against anyone in the course of recovery of credits shall not be deemed to have prevented to take legal action for any offence as per the prevailing laws.