BAFIA Act 2063 An Act Made to Amend and Consolidate Legislation Relating to Banks and Financial Institutions 31.

Classification of licensed institutions: (1) The Rastra Bank shall classify the licensed institutions into A, B, C and D classes on the basis of the minimum paid-up capital required for the license to be issued pursuant to Section 30 to carry on the financial transactions pursuant to Section 47, and issue the license to the concerned bank or financial institution accordingly. (2) The minimum paid-up capital of the licensed institutions classified under Sub-section (1) shall be as prescribed by the Rastra Bank. 47. Financial transactions which licensed institutions may carry on: (1)Subject to this Act and the memorandum of association and articles of association, a Class A licensed institution may carry on the following financial transactions: (a) Accepting deposits with or without interest, and refund such deposits; (b) Supplying credit as prescribed by the Rastra Bank; (c) Dealing in foreign exchange, subject to the laws in force; (d) Supplying credit for hire-purchase, hypothecation, and leasing, housing and service business; (e) Engaging in merchant banking business, subject to the directives of the Rastra Bank. (2) Subject to this Act and the memorandum of association and articles of association, a Class B licensed institution may carry on the following financial transactions: (a) Subject to the limit prescribed by the Rastra Bank, accepting deposits with or without interest, and refund such deposits; (b) Supplying credit, other than hypothecation credit, as prescribed; (c) Dealing in foreign exchange, subject to the laws in force and the directives given by the Rastra Bank; (d) Supplying credit for hire-purchase, leasing, housing and service business; (e) Engaging in merchant banking business, subject to the directives given by the Rastra Bank;

(3) Subject to this Act and the memorandum of association and articles of association, a Class C licensed institution may carry on the following financial transactions: (a) Subject to the limit prescribed by the Rastra Bank, accepting deposits with or without interest, and refund such deposits; (b) Supplying credit, other than hypothecation credit, as prescribed; (c) Supplying credit for hire-purchase, leasing, housing and service business; (d) Carrying on merchant banking business; (e) Writing off credit, subject to the bye-laws made by the Board; (4) Subject to the directives given by the Rastra Bank, a Class D licensed institution may carry on the following transactions: (a) Supplying credit as prescribed; (b) Supplying micro-credit, with or without any movable or immovable property as the collateral or security, for operating any micro-enterprise to any group or members there of who have regularly saved for the period prescribed by the Rastra Bank and maintained the prescribed saving; (c) Obtaining loans or grants from any licensed institution or native or foreign organization, and use such loans or 48grants for the supply of micro-credit or for making the same effective; Provided that approval of the Rastra Bank shall be obtained prior to obtaining loans or grants from any foreign organization. (d) Prior to supplying micro-credits, evaluating the schemes for which micro-credits have been requested and determining whether they are feasible; (e) Engaging in micro-enterprises of such type as may improve the economic condition of lowincome persons;