Licensed Institutions Can Now Freeze Bank Accounts Without Prior Approval: First Amendment to Bank Account Freezing Regulations

The "Bank Account Freezing and Unfreezing Regulations, 2081" promulgated by Nepal Rastra Bank has undergone its first amendment on Ashwin 29, allowing licensed institutions to freeze and unfreeze bank accounts without prior approval from the central bank. Under this amendment, licensed institutions are required to notify Nepal Rastra Bank after freezing an account, rather than seeking prior consent.

Previously, licensed institutions were mandated to obtain approval from Nepal Rastra Bank before freezing or unfreezing the bank accounts of any individual, company, firm, or institution. However, the recent amendment stipulates that these institutions may now exercise their authority to freeze or unfreeze accounts directly, in accordance with the relevant legal provisions. The regulation still requires them to promptly inform Nepal Rastra Bank of such actions.

Furthermore, in cases where funds have been mistakenly credited to an account, the licensed institution is permitted to temporarily freeze the account for up to 48 hours, following verification. Should the account need to remain frozen beyond this period, the institution is required to seek further approval from Nepal Rastra Bank.

This regulation, which was introduced on Ashwin 01, came into force following approval by the central bank’s board of directors on Bhadra 13. It was initially put forward as a draft in Ashad, inviting public comments and suggestions. The amendment has been implemented less than a month after the regulation came into effect.