1. Explain the process of obtaining license for a financial Intermediary.
Answer
Financial Intermediaries are institutions registered under Associations Registration Act 2054.
As per section 3 of the section, No one can carry out the act of financial intermediation without obtaining license.
Process of obtaining license -
1. Application has to be made to NRB with relevant details and documents
- Statute of the institution and certificate of registration of the institution
- Details about the movable and immovable property of the institutions.
- Details about the geographical area of the operation of the institution.
- Details about the office bearers of the institutions.
- Number of members of the institutions
After obtaining such information, NRB shall enquire into the matter and if it is appropriate to provide such license, it shall provide the license to carry out financial intermediation to such institution, NRB can ask such institutions to submit additional documents. If such application is rejected NRB shall give the notice of such rejection to the applicant.
The bank may impose additional conditions on the license issued, it shall be the duty of such institutions to abide by the terms and conditions
Renewal - Every 2 Years. if not renewed, shall ipso facto be cancelled. other provisions shall be as prescribed
2. What are the functions duties and powers of the institutions acting as a financial intermediary?
Answer
- To encourage person with low income to form groups. (E)
- To collect micro-saving from groups or member of such groups (C)
- To Disburse micro-credits to the members with or without taking security or guarantee to carry micro-business (D)
- To obtain Loans or Grants from GON, Bank, native or foreign organizations etc. and to use such grants in disbursing micro-credits to its members.(L) - Should obtain approval of GON through bank to obtain foreign grants
- Prior to disbursing micro-credit, to evaluate the purpose of the micro-credit and if such purpose if feasible or not.(P)
- To make publicity about the micro-business to bring improvement in the economic conditions of the persons with low income. (P)
- Hold Symposia about micro-projects, provide trainings, technical knowledge/assistance, render assistance.(S)
- To provide necessary services in the mobilization of the micro-savings and micro-credit.(M)
- To take necessary action for the recovery of micro-credit.(R)
- To enquire from time to time whether such micro-credits are utilized for the purpose for which they were disbursed. If such micro credits are not utilized properly, to give necessary directions. (U)
- To act as an agent of banks and financial institutions.(A)
ACDP RESUM LP
3. What are the circumstances in which NRB may give directions to financial intermediaries?
- Terms and conditions specified by the bank not followed.
- Not acting in the interest of depositors/savers/borrowers.
- Fails to maintain books accounts and records
- Failed to do any act required to be done by the act.
- Having misappropriated funds/used the amount of the institutions contrary to its objectives.
- Failed to provide documents details or data to NRB as demanded.
It shall be the duty of such institutions to follow such directives.
4. What are the conditions for cancellation of liscence of a financial intermediary?
- Having misappropriated funds or utilized for purposes contrary to the objectives of such organization.
- Not Renewed as per Association Registration Act 2054.
- Abandons the act of financial intermediary.
- Failed to make reforms or make any specific provisions in relation to any activity with specification of the period.
The Bank shall prior to cancellation provide reasonable opportunity of being heard.
5. Jhur Bros, a financial intermediary applied to the bank requesting permission to relinquish its functions. what steps should NRB take?
Case : Able to pay its debts and liabilities
If such application is made by a financial intermediary, the bank may allow such institution to stop financial intermediation
Case : Not Able to pay its debts and liabilities
The bank may may allow such institution to stop financial intermediation and shall write to the GON for the payment of liabilities from the assets of the institutions pursuant to the Association Registration Act, 2034.
6. What are the sources of funds of the financial Intermediary?
- Grant , Loan Received from the Government of Nepal, Foreign Government or associations.
- Amount Received from commercial banks or financial institutions.
- Micro-savings from the members
- Received as fees from the members of the institutions.
- Service charge for the services to be provided by the organization
- Amount received from micro-credit including interest and Fees
- Any other source.
Amount received from micro-saving and received for the micro-credit shall not be used for any other purposes. Deposit in a commercial Bank. if cannot disburse credit for the time being - make investment in periodic deposits for a maximum period of 6 months.
7. Explain the provision of merger of Financial Intermediaries.
Requirements -
- Support of proposal by 2/3rd of members of the members present at the GM. Shall be deemed to have been passed by the general meeting.
- Only to be merged with another financial intermediary.
- Submit such proposal to the office registering such institution and Bank for approval.
Published By
Aadesh Kandel
Share
Comments