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Amendment to the Banks and Financial Institutions Act (BAFIA) 2073: Reforms and New Provisions in the Banking Sector
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Amendment to the Banks and Financial Institutions Act (BAFIA) 2073: Reforms and New Provisions in the Banking Sector

To further strengthen and organize Nepal's banking sector, a proposal to amend the Banks and Financial Institutions Act (BAFIA) 2073 is currently under consideration in the House of Representatives. The Ministry of Finance has pushed the BAFIA amendment bill forward to implement the latest practices developed in national and international financial systems, enhance financial security, and adapt to technological changes. This bill seeks to bring four major changes to the banking sector. 1. Proposal to Separate Bankers and Entrepreneurs One of the main challenges in Nepal's banking sector is the relationship between bank investors and entrepreneurs, and the associated risks. The bill proposes that any individual holding more than 1% of the paid-up capital of any bank should not be allowed to borrow from other banks or financial institutions. The current limit is 2%. This provision aims to tighten controls on investors in the banking sector and reduce the possibility of uncontrolled investments. Under Section 52 of the BAFIA bill, it is proposed that banks and financial institutions should not provide any loans or facilities to affiliated persons or those with significant ownership in any bank. This provision is expected to help minimize financial risks in the banking sector. However, stakeholders have expressed concerns that this provision might negatively impact the investment climate due to investments made by businesses in the banks.

Dipesh Ghimire

·

2 Sep, 2024

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Amendment to the Banks and Financial Institutions Act (BAFIA) 2073: Reforms and New Provisions in the Banking Sector
Popular News

4 min read

Amendment to the Banks and Financial Institutions Act (BAFIA) 2073: Reforms and New Provisions in the Banking Sector

To further strengthen and organize Nepal's banking sector, a proposal to amend the Banks and Financial Institutions Act (BAFIA) 2073 is currently under consideration in the House of Representatives. The Ministry of Finance has pushed the BAFIA amendment bill forward to implement the latest practices developed in national and international financial systems, enhance financial security, and adapt to technological changes. This bill seeks to bring four major changes to the banking sector. 1. Proposal to Separate Bankers and Entrepreneurs One of the main challenges in Nepal's banking sector is the relationship between bank investors and entrepreneurs, and the associated risks. The bill proposes that any individual holding more than 1% of the paid-up capital of any bank should not be allowed to borrow from other banks or financial institutions. The current limit is 2%. This provision aims to tighten controls on investors in the banking sector and reduce the possibility of uncontrolled investments. Under Section 52 of the BAFIA bill, it is proposed that banks and financial institutions should not provide any loans or facilities to affiliated persons or those with significant ownership in any bank. This provision is expected to help minimize financial risks in the banking sector. However, stakeholders have expressed concerns that this provision might negatively impact the investment climate due to investments made by businesses in the banks.

Dipesh Ghimire

·

2 Sep, 2024

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Amendment to the Banks and Financial Institutions Act (BAFIA) 2073: Reforms and New Provisions in the Banking Sector

Dipesh Ghimire

·

2 Sep, 2024

Amendment to the Banks and Financial Institutions Act (BAFIA) 2073: Reforms and New Provisions in the Banking Sector

To further strengthen and organize Nepal's banking sector, a proposal to amend the Banks and Financial Institutions Act (BAFIA) 2073 is currently under consideration in the House of Representatives. The Ministry of Finance has pushed the BAFIA amendment bill forward to implement the latest practices developed in national and international financial systems, enhance financial security, and adapt to technological changes. This bill seeks to bring four major changes to the banking sector. 1. Proposal to Separate Bankers and Entrepreneurs One of the main challenges in Nepal's banking sector is the relationship between bank investors and entrepreneurs, and the associated risks. The bill proposes that any individual holding more than 1% of the paid-up capital of any bank should not be allowed to borrow from other banks or financial institutions. The current limit is 2%. This provision aims to tighten controls on investors in the banking sector and reduce the possibility of uncontrolled investments. Under Section 52 of the BAFIA bill, it is proposed that banks and financial institutions should not provide any loans or facilities to affiliated persons or those with significant ownership in any bank. This provision is expected to help minimize financial risks in the banking sector. However, stakeholders have expressed concerns that this provision might negatively impact the investment climate due to investments made by businesses in the banks.

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