3.3 Power and Function of Banks and Financial Institutions

3.3.1 Carrying Financial and Monetary Transactions Institutions may conduct the transactions their class licence permits: deposits, credit, guarantees, remittance, trade finance, and related services — all within the monetary policy and directive framework of NRB. 3.3.2 Accepting Deposit Deposits may be accepted in current, savings, fixed, and other permitted forms. The banker becomes debtor to the depositor (Unit 4 develops the relationship). NRB sets deposit-rate floors or bands from time to time by directive. 3.3.3 Supply of Various Kinds of Credits Credit is supplied as overdraft, cash credit, term loans, discounting of bills, letters of credit, and guarantees. Credit concentration limits (single obligor, related-party, sector caps) protect the depositors' fund. 3.3.4 Recovery of Credits Recovery follows the contractual and statutory routes: demand and suit, and where the debt instrument qualifies, summary or expedited recovery proceedings under the banking laws and procedure rules. The debtor's assets charged as security are enforced through the security's law (Unit 6). Balance-sheet discipline — classification of loans as pass, watchlist, substandard, doubtful, loss — drives provisioning. 3.3.5 Maintaining Capital Adequacy Institutions must maintain the capital fund ratio fixed by NRB directives (aligned with the Basel framework's approach). Minimum capital, capital conservation buffers, and leverage discipline are ongoing obligations, with dilution of dividends and other measures for breach.