Tribhuvan University
Faculty of Management
Office of the Dean
Bachelor of Business Management (BBM)
Course Description
:This course contains introduction of banking law, central bank and leg al system, structure and formation of bank and financial institutions, major banking law, bank regulation and central bank policy for bank FIs, legal provision relating to negotiable instrument, bank and customer relationship, bank lending and securities, legal aspect of trade finance and emerging challenges in banking business.
Course Objective
:This Course provides an overview of the legislative provision of bank and financial institution, and fundamental banking laws and regulation. This course familiarize with the basic concept of banking laws in local context as well as international market. It highlights major regulation and policies issued by central bank to protect financial system. Course Description This course contains introduction of banking law, central bank and leg al system, structure and formation of bank and financial institutions, major banking law, bank regulation and central bank policy for bank FIs, legal provision relating to negotiable instrument, bank and customer relationship, bank lending and securities, legal aspect of trade finance and emerging challenges in banking business.
Course Contents:
Lecture hours show the approximate classroom time allocated to each unit.
Unit 1. Introduction
- Meaning and concept of bank and financial institutions, significance of banking laws and regulations, o verview of the role of government i n regulating the banking sector, historical development and evolution of banking laws and r egulations in Nepal, key events and legislation that shaped the banking industry.
Unit 2. Regulatory Authorities in Banking
- Central bank and its role in banking regulation , Ministry of Finance and other regulatory agencies and their functions, establishment and composition of BOD in Nepal Rastra Bank, f unction and legal power of Nep al Rastra Bank, Nepal Rastra Bank relationship with government and other agencies.
Unit 3. Structure and formation of Bank and Financial Institutions
- Licensing Policy for bank and financial institutions, capital requirement eligibility criteria and fit proper test for potential promoter, types of bank and FIs, functions of bank and FIs as per BAFIA 2073, composition of BOD, roles and responsibilities of BOD.
Unit 4. Major Banking Law
- Nepal Rastra Bank Act 2058, Bank and Financial Institution Act (BAFIA) 2073, Banking Offense and punishment Act, 2064, Anti-Money laundering Act 2008, Foreign Exchange
- Act 2019 Company Act 2063.
Unit 5. Bank Regulation and Central Bank Policy for Bank and F inancial Institutions 5
- LHs Concept, need and significance of regul ation, Impact of deregulation, m ajor prudential regulation of central bank, capital adequacy, l oan cl assification and provisioning, c orporate governance, blacklisting.
Unit 6. Legal Provision Relating to Negotiable Instrument
- Concept of Negotiable Instruments: Cheque, Draft, B ills of exchange, Promissory note , letter of credit. Validity and dishonored of cheque, right and duties of various parties involved in instruments, impact and legal action for miss using negotiable instruments.
Unit 7. Bank and Customer Relationship
- Legal nature of bank and customer relationship, trustee-beneficiary, agent -principal, debtor- creditor, special types of customer(individual, corporate, Government, NGO etc. ) Account opening and closing procedure. Know Your Costumer - KYC, provision of deposit insurance in Nepal.
Unit 8. Bank Lending and Securities
- Procedure for bank lending, credit policy guideline, c redit sanction limit and authority, legal procedure for recall and recovery of banks loan, meaning and definition of collateral and security, legal feat ures of collateral and security, generally accepted security in Nepalese banking.
Unit 9. Legal aspect of Trade Finance
- Letter of credit, Bank guarantee, Basic features, Parties involves in various trade finance, Roles and responsibilities of parties.
- Unit10: Emerging Issues in Banking Regulation LH 4 Cyber security and data protection , b anking fraud, c limate change and sustainability considerations in banking regulations , Anti-money l aundering (AML) and terrorism financing, E -banking, Technology and I nnovation in banking regulation, prudential regulations
Suggested Readings:
Gupta, S.N. The Banking law on Theory and Practice, Universal. Rose, P. S. Commercial Bank management. New York: McGraw-Hill. Regmi, R. R. Banking law of Nepal. Kathmandu: Lumbini Pustak Padmalatha S., and Paul, J. Management of Banking and Financial Services. New Delhi: Dorlingkindersley Indian Institute of Banking & Finance. General Bank Management. Macmillan. Nepal Rastra Bank Act 2058, Bank and Financial institution Act 2063, Banking Offense Act, 2064 Foreign Exchange Act 2019 Negotiable Instrument Act Antimony laundering Act, 2008 Company Act 2006 A.D. Nepal Rastra Bank-(2015), Unified Directives for Bank and financial institution, Nepal Rastra Bank,Nepal. NRB (2005), Nepal Rastra Bank in Fifty Years, Sajha Prakashan, Pulchowk, Lalitpur, Nepal.