Banking Offense and Punishment Act 2064: Enhancing Financial Integrity in Nepal

Banking offense refers to any unlawful or fraudulent act committed in relation to banking and financial institutions. The government has introduced this law to enhance public trust in the banking and financial system by controlling and minimizing the effects and risk of offensive acts on banking and financial institutions. This Act was promulgated on 2064/10/23 BS and was amended on 2073/04/18. Chapter two of the Act provides a list of acts that constitute banking offenses. This act is promulgated to promote trust towards the banking and financial system thereby mitigating the consequences and the risks that the banking and financial system may suffer.

Offense under the Banking Offense and Punishment Act 2064

1. Not to open an account or demand cash payment in an unauthorized manner

No one shall undertake the following acts while opening an account with a bank or financial institution or demanding cash payment

• Open or knowingly allow to open an account by submitting false documents
• Open or allow to open an account in the name of a fictitious or other person or organization, except otherwise permitted by the laws,
• Draw a cheque to obtain or to knowingly make payment from an account where he/she has an apparent knowledge that the account does not have sufficient balance to cover the amount of the cheque drawn.

2. Not to obtain or issue cheques, cheque-books or bank statements in an unauthorized manner:

• No one shall demand or obtain a cheque, checkbook, or account statement of another person in an unauthorized manner or by misleading in any manner or by giving an impression that he/she is the true holder of the same.
• No one shall provide a cheque, checkbook, or account statement to another person or institution without the request of the concerned person in writing unauthorized manner.

3. Not to make unauthorized withdrawals or payments:

No one shall do the following acts while withdrawing or making payment from an account maintained with a bank or financial institution,

• Withdraw money, in an unauthorized manner, from other person's account,
• Withdraw money by stealing a cheque held by other person or by obtaining the same in any other manner,
• Transfer funds in an unauthorized manner, from the customer's account or make unauthorized payments.
• Obtain or make cash payment by getting any sort of fake or other person's bills of exchange, cheque, draft, or other similar instruments in an unauthorized manner.

4. Not to obtain or make payment by way of abuse or unauthorized use of electronic means.

No one shall obtain or make payment by way of abuse or unauthorized use of a credit card, debit card, automated teller machine(ATM) card, or other electronic means.

5. Not to avail or provide loans in an unauthorized manner:

No one shall commit the following acts while availing or providing loans from a bank or financial institution

• Avail or provide loans by submitting a false, fake, or unreal financial statement or by creating an artificial business.
• Avail or provide over loans by way of unnatural overvaluation of collateral security.
• Avail or provide loans by way of unnaturally hiking the project cost based on false details.
• Avail or provide credit, facility, or discounts beyond the authority obtained or limit sanctioned.
• Re avail or re-provide loans from or by other Bank or Financial Institutions without having a due release of the collateral security once provided to a Bank or Financial Institution or more than the amount covered by the collateral security against the same collateral security.
• Extend credit more than the requirement compared to the customer's business transaction.
• Accept or provide any sort of undue benefit in return for granting credit facility.

6. Not to misuse credit

No one shall misuse the credit facilities availed from a bank or financial institution or let the same be misused by diverting in the purpose other than for which the credit facilities were availed.

7. Not to misuse banking resources, means, and assets:

The Promoter, Director, a shareholder who is deemed to have a financial interest under the prevailing laws, Chief Executive Officer, employee, advisor, Managing Agent or associated person or organization or family member or close relatives of such persons shall not misuse the resources of a bank or financial institution by availing a credit or facility or in any other manner. No one shall commit any financial irregularity, whiling auctioning selling the non-banking assets or other assets of a bank or financial institution or doing any other transactions.

The Banking Offense and Punishment Act, 2064, is a milestone legislation enacted to protect the integrity and credibility of the banking and financial system in Nepal. The Act provides for different offenses, such as handling an account without authorization, fraudulent withdrawals, misuse of financial resources, and unauthorized loan activities, thus laying a strong foundation for discouraging malpractices and maintaining transparency in financial transactions.

The essence of responsible conduct by customers, employees, and financial institutions forms the basis for provisions in this Act. This makes criminal activities like misuse of credit facilities, unauthorized electronic transactions, and the submission of false financial statements, among others, hence ensuring accountability and preventing systemic risks in the banking sector. This act focuses on the regulation and sanctions of improper behavior, which basically means that the government is keen on ensuring confidence in the financial system. Besides, banks and other financial institutions are looked upon as pillars of economic stability. The effective enforcement of the Act, coupled with proactive steps on the part of regulatory bodies, will surely strengthen the financial landscape of Nepal, achieve ethical practices, and deter possible offenders. This is one of those legislative tools which are preventive and at the same time act to build public trust for the long-term sustenance of the financial ecosystem in Nepal.

Banking Offense Lawyer in Nepal

At Alpine Law Associates, we specialize in protecting your legal interests when it comes to serious financial matters such as banking offenses in Nepal. As a fully registered and reputed full-service law firm, we offer dedicated expertise in matters governed by the Banking Offense and Punishment Act, 2064. Whether you are a financial institution seeking to prosecute fraud, an individual wrongly accused, or a victim of unauthorized transactions or financial misconduct, our experienced team of banking offense lawyers in Nepal provides end-to-end support.

We handle everything from legal consultations, document verification, and court representation to liaising with regulatory bodies like Nepal Rastra Bank, Department of Money Laundering Investigation, and CIAA. With an in-depth understanding of legal frameworks surrounding banking fraud, unauthorized withdrawals, misuse of financial resources, and electronic payment crimes, we ensure your rights are protected and justice is served. At Alpine Law Associates, we stand as your trusted partner in the complex field of financial litigation—because integrity, accountability, and trust are the foundations of every strong case we represent.

Conclusion

In an evolving financial ecosystem like Nepal’s, it is critical to ensure transparency, discipline, and public trust in the banking sector. The Banking Offense and Punishment Act, 2064, plays a vital role in deterring fraud, misuse, and systemic risks within the financial system. By clearly outlining offenses and providing punitive measures, the Act strengthens not just regulatory oversight but also public confidence in banks and financial institutions. If you’re facing allegations under this Act, are a victim of banking fraud, or need guidance on compliance and due diligence, Alpine Law Associates is here to support you with experience, discretion, and legal precision. Don’t let a banking offense define your future—seek professional legal counsel and ensure your rights are protected at every step.