Nepal: Financial Intermediary Societies Act, 1999

This document presents 'Financial Intermediary Societies Act' as legislated by the Government of Nepal in 1998. It contains provisions for all the regulatory aspects of carrying out microcredit services by a financial intermediary in the country.

The first five sections of the paper encompasses the following:

• Interpretation of the application of this Act and definitions of the common terms used;
• The requirements for obtaining a license to operate financial intermediation services;
• The role and responsibility for financial intermediary societies that are integral to carrying out such services;
• The duties and authority, which the regulator (Nepal Rashtra Bank) can exercise on societies that are into this business;
• The guidelines for management of the microcredit fund, and the principles for accounting standards and auditing that need to be followed.

The other sections highlight the following issues:

• Penalties against non-compliance with the provisions of this Act;
• Annual reporting and tax compliance;
• Winding up, amalgamation and transfer of assets of societies.

The paper concludes with the rights given to the Central Bank to further frame rules to implement the objectives of this Act.