Provision Related to Merger of BFIs

 The Bank and Financial Institutions (BFIs) can merge  or one can acquire another under the provision of Bank and Financial Institutions Act (BFIA), by Following the procedure outline by the act Section 69 of BFIA and NRB Act. However, Class 'D' Financial Institutions may be merged with one another in same class and an infrastructure development bank and a regular bank or financial institution cannot merge or acquire each other.

if the condition found in an inspection and supervision reports by Nepal Rasta Bank (NRB), the NRB can order bank or financial institutions to merge one with another or have some of its assets, liabilities or business can merge with another. These condition are according to section 69 (3) of the BFIA is following

• inadequate capital funds or deteriorating financial position over the last three years
• Action that harms depositors' interest or a situation that poses such risk.
• the need to enhance competitiveness at a national and international level for the stability and development of the states financial system.

If the special conditions are identify by NRB reports then NRB can order a bank or financial institution to acquire one and another having stated the following conditions/ reasons.

1. Multiple bank or financial institution belong to the same group with an unhealthy financial relation.
2. Inability to protect depositor ordinary, shareholder and other customer right due to negative impact of the BFIs or operated in the Status Quo.
3. Increase system base risks and inability to meet liabilities.
4. Failure to issue share within prescribed time or meet minimum paid up capital.
5. The BFIs Undergoing frequency reforms are experiencing government dispute in the board of director.