Section 86F: Power of the Bank for Corrective Action

1) The bank has to publish in public the report of management auditing or auditing within one year of the control of the commercial bank or financial institution, which is declared problematic under the provision of Clause (o) of sub-section (1) of Section 86C, either conducted itself or by others.

2) Whatever may be mentioned in the Companies Act or any other prevailing law, on the basis of the management auditing or auditing report under sub-section (1), if the bank is convinced that the controlled commercial bank or financial institution can operate properly, it can carry out the following corrective actions as per necessity:

(a) Issue an order to manage and operate the transaction to the board of directors by releasing the suspension order issued under the provision of Clause (o) sub-section (1) of Section 86C,

(b) Assign the management and operation of the transaction to the new board of directors formed among the shareholders of such a commercial bank or financial institution by removing the suspended board of directors under the provision of Clause (o) of sub-section (1) of Section 86C,

(c) Call or cause to call the general meeting of the shareholders of such commercial bank or financial institution to elect the new board of directors for the management and operation of transactions after removing the suspended board of directors under the provision of Clause (o) of sub-section (1) of Section 86C, or

(d) Carry out any other corrective measures which the bank thinks appropriate.

*3) By remaining under the standard fixed on the ground of assessment of the management or audit report or the report of official appointed by the Bank as per sub-section (1), the Bank can give order as per necessary by publishing public notice for any shareholder to sell, distribute and transfer the ownership of the share remained on his/her name to any person deemed appropriate by the Bank so as to obtain payment of the price determined by the committee formed by getting the representatives of the Nepal Security Board and Institute of Chartered Accountants of Nepal as well as other external experts involved.

4) Bank can confiscate the shares which are not sold, distributed and transferred because of any reason under Clause (a) of sub-section (3), and bank can sell, distribute and transfer such shares in any manner which it thinks proper to anybody with the advice of the committee constituted under Clause (a) of sub-section (3).

5) The bank may provide a reasonable opportunity for a hearing from the stakeholder about the proposed issue before taking any decision against any commercial bank or financial institution under sub-section (3).

Provided that, if the bank feels that prior opportunity of hearing can make negative effect to the interest of such commercial bank or financial institution, its depositors, shareholders, creditors or general public, the bank can provide opportunity of hearing as soon as possible after making such decision and if the bank satisfied with the reason and basis presented during the time of hearing it can change or repeal the decision as per necessity.

* Amended by the Second Amendment.