NRB's directive brings changes into the provisioning requirement of banks; Unclaimed deposits for 20 years to go into Banking Development Fund

Nepal Rastra Bank (NRB) has issued a directive where by Banks and Financial Institutions (BFIs) investing in companies who aren't mandated to list in Stock Exchanges have to maintain provision only be the investment is over 51%. Any investments below 51% doesn't require creation of provision.

Investment in shares and debentures of Public limited company established to operate non-listed Hydro-electric projects, renewable energy project, electricity transmission line and cable car construction projects should be listed within 3 years and if it is not listed then the bank should create provision equivalent to the value of investment. Similarly, for investment in non-priority sector such period has been fixed at 2 years.

After the creation of provision, the fund can't be used elsewhere until the shares and/or debentures are listed.However, creating provision is not necessary if the investment is below 51%.

Similarly, NRB has also issued a notice mentioning that if the account holders haven't visited bank for 3 years or more after opening the account, the account will be automatically deactivated.

Likewise, the details of accounts that haven't been used for the past 10 years and for which no one come to claim the deposits in that account, should be forwarded to NRB on the first month of every Fiscal Year.

The banks are also instructed to issue a notice in national daily and their respective websites summoning the related individuals to claim the deposits. If the amount hasn't been claimed for 20 years, then that money will go to "Banking Development Fund".