ABSTRACT The investigator and prosecutor encounter enormous difficulties and challenges in dealing with the cross-border cyber related crimes. This article intends to show practical difficulties prosecutors and investigators often face when they deal with the cross-border cybercrimes. For example, foreign States often refused to share the information and evidences if the alleged conduct is not amounted to crime under their law.
Further, the investigators follow the Mutual Legal Assistance Treaties (MLAT) mechanisms to request assistance and other evidences from a foreign country, which often proved to be time-consuming. Alarmingly, it became very challenging for investigators and prosecutors to identify and locate the actual perpetrator since perpetrators now use modern technologies and methods to hide their identity and location. Thus, this article aims to explore some of the common challenges prosecutors and investigators meets in their day-to-day work.
THE global nature of the internet creates serious problems in reality. The investigators and prosecutors encounter enormous difficulties and challenges in dealing with the cross-border cyber related cases. This article intends to show practical difficulties prosecutors and investigators often face when they deal with the cross-border cybercrimes. Differences in the legality of the Subject matter: One of the issues which create a serious problem for the prosecutor and the investigator is differences in the legality of the subject matter. This means what is illegal under the laws of Bangladesh could be legal in other country. In today’s world it became very easy for someone sitting in nation ‘X’ to commit a criminal act against a victim physically situated within the territory of nation ‘Y’ without ever leaving his own country.
This could be well explained from an earlier example where a German website was selling child pornographic contents in their website. In Germany it was legal since their age limit for entering into such business was only 14 years.
However, these pornographic contents were alleged for breach of Belgian and the laws of Singapore. The website owners were indicted in Singapore because of spreading pornographic material in Singapore, even though the company has never done any business with someone from Singapore. Further, the Website owners were also ordered to appear in the Court of Belgium. This is all because some of the adult pictures were considered to be of 17 year old minors constituting the crime of child pornography under the Belgian and the laws of Singapore. This example clearly shows how a legal business under the law of Germany confronted criminal laws of all countries connected to the internet. In such situation, prosecutors encounter serious difficulties in preparing their case.
For instance, they hardly find any help from the foreign investigative agencies since some countries only offer help if the conduct is illegal in the country whose assistance is being requested. Therefore, the prosecutors face unexplainable difficulties in establishing their case against the perpetrators from another jurisdiction. This is a hurdle in the investigatory process as well. This is because some countries only grant assistance if the conduct is illegal under their own law.
Establishing Jurisdiction: As an example, in a number of offences the UK legislations provide the UK to exercise its jurisdiction over an offence committed or operated extra-territorially i.e. Outside the UK. For example, the Computer Misuse Act (1990) (CMA) is the main piece of UK legislation relating to offences or attacks against computer systems such as hacking or denial of service. This Act provides jurisdiction to prosecute where there is a “significant link” with the domestic jurisdiction. This usually includes the fact that the accused or the targeted computer was in England and Wales. This is not as straight forward as it sounds.
The prosecutors need to find available credible evidences to establish such link. The Court often consider whether the alleged conduct or crime have a “substantial connection with the jurisdiction”. It follows that, where a substantial number of the activities constituting a crime take place within England and Wales, the Courts of England and Wales have jurisdiction unless it can be argued on a reasonable view that the conduct ought to be dealt with by the Courts of another country; ( R v Smith (Wallace Duncan) (No.4) 2004 3 WLR 229, per Lord Chief Justice Woolf).
In the case of R v Sheppard and Whittle (2010) Sheppard posted racially inflammatory material to a website, registered in his name and operated by him, but based in California. Once the material reached the server in California, it was posted online and made available on the internet to all those visiting the website, including people in the jurisdiction of England and Wales. In this case, the Court came to the conclusion that the jurisdiction was governed by the “substantial measure principle” enunciated by the Court in R v Smith.
Thus, the prosecutors need to establish “substantial connection with the jurisdiction” to invite the Court to act extra-territorially. In some widespread cases, too many countries show their interest to investigate and prosecute a perpetrator.
In such situations, investigators and prosecutors often meet to decide what they should do. To resolve such issues, they need to negotiate with the investigators from other jurisdictions and need to set out how jurisdiction could be best determined. On the other hand, at times the problem of “negative international jurisdiction” also arises. This essentially means that, some cases are not investigated because they could be prosecuted in one of many countries. However, ultimately, no state authority in fact takes the action to prosecute.
Further, if an offence committed in various countries or where the offender and victim are located in different places, question arises as to which Court should deal with the matter. If the offence in question can be charged in the country in which the offender is located then problems of extradition will be avoided. However, if the offence must be charged in the country in which the victim is located or where the effect of the conduct occurred, then the offender will need to be extradited to that country. This often creates problem for the investigators and prosecutors if the states do not have extradition treaty. At times, prosecutors need to initiate the case in absentia i.e. Trial in absence of alleged perpetrator. For instance, in May 2014, five Public Liberation Army officers (member of an organization based on Shanghai, China) were charged in absentia by US authorities with offences related to cyber related crime; ( United States District Courts, USA v Wang 2014 944 F.2d 80).
Collecting Evidence: The recent intensification of the cybercrime is alarming. However, prosecutors and other investigator authorities face enormous problems in collecting evidences to prosecute the perpetrators operating criminal conduct extra-territorially. In an international context, it is often difficult and time-consuming to establish which jurisdiction regulates the preservation and collection of evidence from online service providers.
Further, it has been analysed that the number of unreported online victims are “higher than in the physical world”. This means the prosecution team do not receive enough evidence to overcome the evidential threshold to initiate the case against the perpetrator. Even if they receive the statements from the victims, however they often fail to detect the perpetrators. The investigators often rely on the international cyber related agencies to obtain the evidence.
This is because the state investigatory agencies cannot directly enter into another State’s jurisdiction to obtain information and evidences. They need to negotiate with other agencies to use mutual legal assistance (MLA) channels. At times this negotiation process wholly depends on the political relationship between the States. It also shows that, different countries have different priorities and focus areas in terms of the importance of cybercrime investigations. In majority countries, economic crimes committed using computers are often at the bottom of the hierarchy of importance in countries where violent crime is prevalent, or where national security interests may be at stake. As a consequence, the requests for assistance in cybercrime cases may simply be given a much lower priority, especially if they have come from a country with no history of cooperative action. Moreover, under the Mutual Legal Assistance Treaties (MLAT), prosecutors in one country may request assistance from their counterparts in a foreign country in order to perform tasks including the investigation of suspects and the collection of evidence.
Once provided by the foreign counterpart, the collected evidence may be used in a prosecution in the requesting country. While simple in concept, the MLAT process is often difficult and time-consuming to accomplish. The detailed nature of the request and the requirement for international approval can often complicate and impede efforts at information gathering. State Sponsored Cybercrime: It is already established by a number of researches that the States and States-sponsored agents often engage in cybercrime. For instance, there are number of allegations have been made that the Chinese authorities are engaged in wide-spread economic and industrial espionage, and the US Government has engaged in massive programs of cyber-surveillance. These State sponsored actions may not be defined as criminal act under the laws of the State that undertakes them, but are usually regarded as crimes by the State that is on the receiving end.
Yet, prosecutors and investigators can do very little in such cases even if they produce very strong evidence in supporting such cyber-attack against a State For example, in 2014, allegations have been made that the North Korea sponsored a hack on Sony Pictures Entertainment, US. It was concluded by the US intelligence officials that the hack was originated in North Korea, and may have been sponsored by the North Korean government. The North Korean government not only denied the involvement but refused to provide any assistance to international prosecution efforts. This outcome is plainly evident that, without the cooperation of other State there is simply no mechanism for foreign governments to take effective legal action against the individuals who perpetrated the act. Securing Extradition: “Dual Criminality” Securing extradition is one of the most challenging stages for the investigator and prosecution team.
Extradition requires not only that an appropriate treaty exist between the two countries concerned, but also that the conduct in question be criminalised in both referring and receiving country i.e. “dual criminality”. In the case of cyber related crime, this is often not the case. An example of the kind of difficulties that can arise concerns the case of “Onel de Guzman” who was alleged to have sent out the so-called “Love Bug virus” in May 2000. The virus which infected Microsoft Windows operating systems was sent by E-mail attachments which when opened damaged files in the computer and then replicated itself by sending similar messages to all the addresses in the infected computer’s address book. The estimated damage caused globally was estimated to be between $6.7 billion and $15.3 billion.
The virus was traced to an internet service provider in the Philippines who cooperated with police to locate the residence in question. A computer science student named Onel de Guzman was arrested but the creation and release of a computer virus was not illegal by Philippine law at that time.
Since the conduct was not illegal in the Philippines he could not be extradited to the US where the conduct was illegal. This was due to the principle of “dual criminality”.
Hard to detect and find identity: The investigators and prosecutors encounter serious difficulty in establishing the identity and responsibility of a particular crime took place in cyber-world. For example, one may hack X’s face-book account from outside of Bangladesh and use his account to commit a crime. Thus, at the initial stage, the face-book account holder would be accountable for the crime committed by someone else.
For instance, in March 2003, a case was reported in the UK that provides a good example of the problem of trans-national identity related fraud. The case concerned a 72 year-old man, Derek Lloyd Sykes, whom the FBI was investigating in connection with alleged cyber telemarketing fraud involving millions of dollars in the US. Since 1989, Derek Sykes had been making use of the identity of a 72-year old retired businessman from Bristol in the UK, Derek Bond, who had never met Derek Sykes, and had no connection with his alleged crimes at all. The FBI issued a warrant for the arrest of Derek Sykes and this was executed by South African Police in Durban on 6 February 2003 in the name of Derek Bond. Unfortunately, Derek Bond, the retired businessman, who was on holiday with his wife, was arrested instead of Derek Sykes. Mr Bond was held in custody at police headquarters in Durban until 26 February 2003 when he was released following the arrest of the real suspect, Derek Sykes.
Further, criminals can use sophisticated methods to hide their identity and location. In this regard, recent joint report of Eurojust and Europol states that the increasing criminal use of “encryption”, “anonymisation” tools, “virtual currencies” and the “Darknets” have led to a situation where law enforcement may no longer (reasonably) establish the physical location of the perpetrator, the criminal infrastructure or electronic evidence. In these situations, it is often unclear which country has jurisdiction and what legal framework regulates the collection of evidence or the use of special investigative powers such as monitoring of criminal activities online and various undercover measures. In recent time, perpetrators are taking the help of new technologies to commit crimes.
Therefore, it is really becoming tough for the prosecutors and investigators to locate the perpetrator, understand the issue, and establish the case against the actual perpetrators. It even becomes more challenging when investigators cannot directly conduct the investigation and rely on the information provided by other foreign agencies. Therefore, this area should be explored further and States should sit together and take initiatives to conduct in-depth research work to harmonise the existing cyber-related laws. The States may consider inaugurating an all-inclusive international treaty to deal with these challenges.
D. Marc Goodman and W. Brenner Susan, ‘The Emerging Consensus on Criminal Conduct in Cyberspace’ (2002) vol. 3, Journal of Law & Technology, pp 4-24. Brenner and Bert-Jaap Koops, ‘Approaches to Cybercrime Jurisdiction’ (2004) vol. See also: Jurisdiction, Legal Guidance: Crown Prosecution Service. Available at: Last Accessed on 11 th July 2017.
R v Sheppard and Whittle (2010) EWCA Crim 65. Dr Russell and G. Smith, Investigating Cybercrime: Barriers and Solutions (Pacific Rim Fraud Conference Sydney, 11 September 2003). Available at: Last Accessed on 11 th July 2017. Jo Bryce, ‘Online sexual exploitation of children and young people’ in Yvonne Jewkes and Majid Yar (eds), Handbook of Internet Crime (Willan Publishing, 2010) at page. Dr Russell and G.
Marcus Funk, Mutual Legal Assistance Treaties and Letters Rogatory: A Guide for Judges (Federal Judicial Center, 2014) at page 2-3. Roderic Broadhurst, Peter Grabosky, Mamoun Alazab & Steve Chon, ‘Organizations and Cyber crime: An Analysis of the Nature of Groups engaged in Cyber Crime’ (2014) Vol.
8:1, International Journal of Cyber Criminology, pp. Said to Find North Korea Ordered Cyberattack on Sony, (2014).
Available at: Last Accessed on 2 nd of July 2017. Bell, ‘The Prosecution of Computer Crime’ (2002) vol.
9:4, Journal of Financial Crime, pp. Broadhurst & P. Grabosky, ‘Computer-Related Crime in Asia: Emergent Issues’ in R. Broadhurst & P. Grabosky (Eds.), Cyber-crime: The Challenge in Asia (Hong Kong: Hong Kong University Press) at pp.
BBC News, Pensioner freed after FBI bungle (26 February, 2003). Available at: Last Accessed on 22 nd June 2017. See also: BBC News, How the mix-up happened (26 February, 2003). Available at: Last Accessed on 22 nd June 2017. Eurojust and Europol, Common challenges in combating cybercrime (Brussels, 13 March 2017, 7021/17).
First published in 2015, Bangladesh Journal of Legal Studies (BDJLS) in an open-access online academic law journal. We are trying to create awareness regarding various legal issues of both national and international importance. BDJLS provides a wide range of audience for academic researchers and legal practitioners to communicate their ideas and opinions. BDJLS specially puts its endeavour in promoting awareness and proposing necessary legal reforms to uphold basic human rights and dignity of all human beings. Our main goal is to work as a polestar and a stepping stone for young researchers, who are searching for a platform to unveil their limitless potentialities.
Case Laws by Topic.
Introduction Financial services firms are in the business of accepting risk. Primary aims of any financial services firm are collect and manage risks on behalf of their customers and make a profit for its shareholders. We may define ‘Risks’ as uncertainties resulting in adverse outcome, adverse in relation to planned objective or expectations. In the financial arena, enterprise risks can be broadly categorized as credit risk, operational risk, market risk and other risk. Credit risk is the oldest and important risk which banks exposure and important of credit risk and credit risk management are increasing with time because of some reasons like economic crises and stagnation, company bankruptcies, infraction of rules in company accounting and audits, growth of off-balance sheet derivatives, declining and volatile values of collateral, borrowing more easily of small firms, financial globalization and BIS risk-based capital requirements.
Credit risk can be defined as the risk of losses caused by the default of borrowers. Default occurs when a borrower can not meet his financial obligations. Credit risk can alternatively be defined as the risk that a borrower deteriorates in credit quality.
This definition also includes the default of the borrower as the most extreme deterioration in credit quality. Credit risk is managed at both the transaction and portfolio levels. But, banks increasingly measure and manage the credit risk on a portfolio basis instead of on a loan-by-loan. In credit risk management banks use various methods such as credit limits, taking collateral, divers Dhaka ation, loan selling, syndicated loans, credit insurance, securitization and credit derivatives.
Vista angkasa apartment management office. A variety of dishes are served in Elegant Inn and Seoul Bulgogi, which are 10 minutes’ walk away. The apartment provides ironing service and grocery shopping service. Major Kuala Lumpur sights, such as Starhill Gallery and Fahrenheit 88 are located nearby.
Credit risk is considered as a critical factor that needs to be managed by the banks and financial institutions. Credit Risk Management process permits the banks to proactively manage loan portfolios in order to minimize losses and earn a satisfactory level of return for shareholders. It includes detection, measurement, matching mitigations, supervision and control of the credit risk exposure. The purpose of credit risk management is to ensure that individuals taking the risk have full knowledge about it, the bank or financial institution is exposed to an approved risk limit, the risk related decisions are in line with the business strategies, the compensation for the risk is adequate and sufficient capital support is there to buffer the risks. Credit Risk Management process includes Credit Investigation, Financial Analysis, Credit Assessment, Credit Approval, Documentation, Monitoring ( Follow up, Supervision and Control) and Credit Recovery procedures. Banks and Financial Institutions have high exposure to credit risk and Dhaka Bank Ltd. Was initially emerged in the Banking scenario of the then East Pakistan as Eastern Mercantile Bank Limited at the initiative of some Bangle entrepreneurs in the year 1959 under Bank Companies Act 1913.
After independence of Bangladesh in 1972 this Bank was nationalized as per policy of the Government and renamed as Dhaka Bank Ltd. The bank is pledge-bound to serve the customers and the community with utmost dedication. The prime focus is on efficiency, transparency, precision, and motivation with the spirit and conviction to excel in both value and image. In this respect, Dhaka Bank Ltd. Has established its own credit policy which will guide them in achieving their target of maximum value addition through an efficient and effective credit risk management. Objectives of the study The objectives of this study are as follows: i) To have a sound understanding of credit risk management system and procedure followed in the Dhaka Bank Ltd.
Adr In Artha Rin Adalat Ain 2003
Ii) To gain knowledge about the credit related operations and maintenance in this bank. Iii) To analyze in detail the credit risk management process of the bank and to make recommendations if needed. Iv) To focus on the credit risk grading system for analyzing the credit assessment procedure of Dhaka Bank Ltd. V) To have a general idea about the credit risk management performance of this bank. Methodology of the study The methodology includes the sample selection, sources of data and method of data analysis.
Sample selection The organization to be discussed is Dhaka Bank Ltd. All the departments and functional areas will be covered with more emphasis on credit division. Sources of data The study is conducted on the basis of both primary and secondary data. Primary Data The primary data are collected from all the departments of Dhaka Bank Ltd by interviewing personnel of the respective departments.
The heads of the departments or senior executives have been interviewed. However, the analysis and the explanation are the authors’ own.
Secondary Data: The secondary data of the study are based on a review of existing brochures, documents and database of Dhaka Bank Ltd. The industry best practices are largely based on Bangladesh Bank manual, guidelines and databases. Books and published articles on this topic have also been consulted Data analysis The credit risk management data of Dhaka Bank Ltd will be analyzed in a descriptive manner. Scope of the study The scope of the study is entire Dhaka Bank Ltd.
This report is a descriptive study which tries to focus on the theories and practices of credit risk management in the context of the financial institutions in Bangladesh. It will not focus on the comparable credit practices of other banks. In connection with this effort, a case study has been conducted on Dhaka Bank Ltd giving more emphasis on the credit side of the institution compared to the other sides. Just Dhaka ation of the study In recent days, people are becoming more aware about the management of their resources. As the banks do business by lending their depositors’ money, they have even more responsibility to manage their credit portfolio smoothly. Bank’s reputation is a critical factor for its success and therefore modern banks must follow appropriate guidelines, policies and relevant manuals regarding credit extension and recovery. The usage of banking service for any type of financial activities is increasing day by day.
People are taking loans to start different types of businesses. It is now very important to know the internal processes of the banks and financial institutions to make informed decisions regarding their integrity, scope, ability and capacity. Management of credit portfolio is one of the major operations of the banks. Therefore, as a 1 st generation bank, Dhaka Bank Ltd should give much attention to this area and this study will attempt to analyze their efforts and draw a complete picture of their practices. Limitations of the study The limitations of the study are as follows: i) The credit policies and manuals of DBL are of confidential nature and thus it is difficult to collect the necessary literature and documents within this short time. Ii) The bank officials though helpful in every respect do not have much time to explain the internal procedures.
Iii) Many operations relating to the credit extension run simultaneously by different credit officials and it is difficult to capture the sequence of any particular credit proposal. Iv) A structured filing procedure is often neglected which also poses difficulty in understanding the sequential procedure. V) Borrowers do not often have the time to cooperate in the information gathering process. Credit Risk Management: A Theoretical Framework Contemporary banking organizations are exposed to a diverse set of market and non-market risks, and the management of risk has accordingly become a core function within banks.
Banks have invested in risk management for the good economic reason that their shareholders and creditors demand it. But bank supervisors, such as the Bangladesh Bank, also have an obvious interest in promoting strong risk management at banking organizations because a safe and sound banking system is critical to economic growth and to the stability of financial markets.
Indeed, identifying, assessing, and promoting sound risk management practices have become central elements of good supervisory practice. What is credit? In banking terminology, credit refers to the loans and advances made by the bank to its customers or borrowers. Bank credit is a credit by which a person who has given the required security to a bank has liberty to draw to a certain extent agreed upon.
It is an arrangement for deferred payment of a loan or purchase. (Wikipedia dictionary) Credit means a provision of, or commitment to provide, funds or substitutes for funds, to a borrower, including off-balance sheet transactions, customers’ lines of credit, overdrafts, bills purchased and discounted, and finance leases. (Guideline on credit risk management, Bank of Mauritius) What is credit risk?
Risk means the exposure to a chance of loss or damage. Risk is the element of uncertainty or possibility of loss that exist in any business transaction. Credit risk is the likelihood that a borrower or counter party will be unsuccessful to meet its obligation in accordance with agreed terms and conditions.
(Wikipedia dictionary) Credit risk means the risk of credit loss those results from the failure of a borrower to honor the borrower’s credit obligation to the financial institution. (Guideline on credit risk management, Bank of Mauritius). Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms (Basel Committee on Banking Supervision,2000). Ident Dhaka ation A bank’s risks have to be identified before they can be measured and managed.
Typically banks distinguish the following risk categories: — Credit risk — Market risk — Operational risk Measurement The consistent assessment of the three types of risks is an essential prerequisite for successful risk management. While the development of concepts for the assessment of market risks has shown considerable progress, the methods to measure credit risks and operational risks are not as sophisticated yet due to the limited availability of historical data. Calculation of Credit risk Credit risk is calculated on the basis of possible losses from the credit portfolio. Potential losses in the credit business can be divided into — expected losses and — unexpected losses (Credit Approval Process and Credit Risk Management, 2005, Oesterreichische National bank) Expected losses are derived from the borrower’s expected probability of default and the predicted exposure at default less the recovery rate, i.e. All expected cash flows, especially from the realization of collateral. The expected losses should be accounted for in income planning and included as standard risk costs in the credit conditions.
Unexpected losses result from deviations in losses from the expected loss. Unexpected losses are taken into account only indirectly via equity cost in the course of income planning and setting of credit conditions. They have to be secured by the risk coverage. (Credit Approval Process and Credit Risk Management, 2005, Oesterreichische National bank) Aggregation When aggregating risks, it is important to take into account correlation effects which cause a bank’s overall risk to differ from the sum of the individual risks. This applies to risks both within a risk category as well as across different risk categories.
Planning and management Furthermore, risk management has the function of planning the bank’s overall risk position and actively managing the risks based on these plans. The most commonly used management tools include: — Risk-adjusted pricing of individual loan transactions — Setting of risk limits for individual positions or portfolios — Use of guarantees and credit insurance — Securitization of risks — Buying and selling of assets Monitoring Risk monitoring is used to check whether the risks actually incurred lie within the prescribed limits, thus ensuring an institution’s capacity to bear these risks. In addition, the effectiveness of the measures implemented in risk controlling is measured, and new impulses are generated if necessary. (Basel Committee on Banking Supervision, 2000) Source: (Credit Approval Process and Credit Risk Management, 2005, Oesterreichische National bank) PRISM Model of credit risk management PRISM model is a contemporary model used in the credit risk management in modern world. It is called PRISM, an acronym for – P = Perspective R = Repayment I = Intention S = Safeguards M = Management Management, a PRISM component, centers on what the borrower is all about, including history and prospects. Intention or loan purpose serves as the basis for repayment.
Repayment focuses on internal and external sources of cash. Internal operations and asset sales produce internal cash, whereas new debt or equity injections provide external cash sources. Internal safeguards originate from the quality and soundness of financial statements, while collateral guarantees and covenants provide external safeguards. The final component, Perspective, pulls other sections together: the deal’s risks and rewards and the operating and financing strategies that are broad enough to have a positive impact on shareholder value while enabling the borrower to repay the loan (Morton Glantz 2004). Prerequisites for Efficient Risk Management Methods The methods used show how risks are captured, measured, and aggregated into a risk position for the bank as a whole.
In order to choose suitable management processes, the methods should be used to determine the risk limits, measure the effect of management instruments on the bank’s risk position, and monitor the risk positions in terms of observing the defined limits and other requirements. Processes and organizational structures Processes and organizational structures have to make sure that risks are measured in a timely manner that risk positions are always matched with the defined limits, and that risk mitigation measures are taken in time if these limits are exceeded. Concerning the processes, it is necessary to determine how risk measurement can be combined with determining the limits, risk controlling, as well as monitoring. Furthermore, reporting processes have to be introduced. The organizational structure should ensure that those areas which cause risks are strictly separated from those areas which measure, plan, manage, and control these risks.
IT systems and an IT infrastructure IT systems and an IT infrastructure are the basis for effective risk management. Among other things, the IT system should allow — The timely provision and administration of data; — The aggregation of information to obtain values relevant to risk controlling; — as well as an automated warning mechanism prior to reaching critical risk limits. Why manage credit risk? The reasons behind managing credit risks are as follows (Amitabh Bhargava,2004): a) Increase shareholder value — Value creation — Value preservation — Capital optimization b) Instill confidence in the market place c) Alleviate regulatory constraints and distortions thereof. Risk Strategy A successful, bank-wide risk management requires the definition of a risk strategy which is derived from the bank’s business policy and its risk-bearing capacity. Risk strategy is defined as — the definition of a general framework such as principles to be followed in dealing with risks and the design of processes as well as technical-organizational structures; and — the definition of operational indicators such as core business, risk targets, and limits.
The risk strategy in an operational sense should be prepared at least every year, with risk management and sales cooperating by balancing risk and sales strategies. The sales units contribute their perspective concerning market requirements and the possible implementation of the risk strategy. The proposal for a risk strategy thus worked out will be presented to the executive board, and following their approval, passed on to the supervisory board for their information.
The risk strategy serves to establish an operational link between business orientation and risk-bearing capacity. It contains operational indicators which guide business decisions.
(Credit Approval Process and Credit Risk Management, 2005, Oesterreichische National bank) Limits The definition of limits is necessary to curb the risks associated with bank’s activities. It is intended to ensure that the risks can always be absorbed by the predefined coverage capital.
When the limits are exceeded, risks must be reduced by taking such steps as reducing exposures or using financial instruments. Methods of Defining Limits The risk limits in the bank’s individual business units are based on the bank’s business orientation, its strategy, and the capital allocation method selected. A consistent limit management system should be installed to define, monitor, and control the limits. Such a system has to meet the following requirements: — The parameters used to determine the risks and define the limits should be taken from existing systems.
The parameters should be combined using automated interfaces. This ensures that errors due to manual entry cannot occur during the data collection process. — The defined indicators should be used consistently throughout the bank. The data should be consistent with the indicators used in sales and risk controlling. — Employees should be able to understand how and why the indicators are determined and interpreted. This is intended to ensure acceptance of the data and the required measures, e.g.
When limits are exceeded. — In order to guarantee effective risk management, it is essential to monitor risks continuously and to initiate clear control processes in time.
Therefore, credit decision and credit portfolio management should be closely linked to limit monitoring. (Bernanke, 2006) Limit Structure The maximum risk limit is determined by the capital allocated to cover credit risks in the planning process. The bank’s organizational structure has a signDhaka ant impact on the way in which the limits are designed. One important success factor in the effective use of limits for risk controlling purposes is that a unit or an employee has the appropriate responsibility for an organizational unit which is assigned a limit. This is the only way to ensure that compliance with the limits is monitored and suitable measures are taken. (Bernanke, 2006) Besides the types of limits mentioned above, there are further limit categories: Product, business area, country, and industry limits Product limits can be defined, among other things, for loans to retail and corporate customers, for real estate loans, as well as for project finance.
Banks with an international focus can also define country limits in order to manage their risks arising from transactions in other regions. They also define industry limits in order to avoid a concentration of risks in individual industries that are subject to a degree of risk depending on the business cycle. (Bernanke, 2006) Risk class limits Monitoring and limiting the concentration of exposures in certain risk classes is necessary to be able to detect a deterioration of the portfolio in time, and thus to be able to avoid losses as far as possible by withdrawing from certain exposures. (Bernanke, 2006) Limits on unsecured portions The definition of limits for unsecured portions restricts loans that are granted without the provision of collateral or which are collateralized only partly. These limits allow banks to manage their maximum risks efficiently, as it is easy to determine and monitor unsecured portions.
Individual customer limits Limits for individual borrowers represent the most detailed level of risk controlling. The main purpose for their application is the prevention of cluster risks in the credit portfolio.
The more precisely the limits are defined; the more likely they are to yield control impulses that can be taken into account already at the time of approval of individual loans. (Bernanke, 2006) Rigidity of Limits In order to allow the use of limits to manage risks, it is necessary to define how strictly these limits should be applied. In practice, the rigidity of limits varies in terms of their impact on a bank’s business activities. — Certain limits are defined rigidly and must never be exceeded, as otherwise the viability of the bank as a whole would be endangered.
— In addition, there are early warning indicators that indicate the risk of exceeding limits ahead of time. This differentiation ensures that control signals are sent out not only after the (rigid) limits has been exceeded, but that early warning indicators point out the risk of exceeding a rigid limit in time to make sure that appropriate countermeasures can be taken immediately (Burns and Stanley, 2001) Limit Monitoring and Procedures Used When Limits Are Exceeded The stipulated limits can have a direct impact on the credit approval. It needs to be determined if compliance with the limits should be examined before or after the credit decision is taken.
In practice, this compliance is usually checked ex post, i.e. After the credit approval based on the portfolio under review, and is not a component of the individual loan decision. The credit decision is taken based on the borrower’s credit standing and any collateral, but independently of the portfolio risk. Such ex-post observation can result in a relatively high number of cases in which limits are exceeded, thus reducing the effectiveness of the limit stipulations. (Amitabh Bhargava, 2004) Some banks check the compliance with the limits immediately during the credit approval process. Prior to the credit decision, compliance with the relevant limits is checked in case the credit is approved. Bringing limit monitoring into play at this early stage is also referred to as ex-ante monitoring.
This helps prevent the defined limits from being exceeded in the course of approving new loans. Ex-ante monitoring is quite complex. Figure Responsibilities in case of excess over limit Source: (Credit Approval Process and Credit Risk Management, 2005, Oesterreichische National bank) The limit utilization has to be documented in the credit risk report. Processes and responsibilities concerning measures to be taken when limits are exceeded have to be defined clearly. The decision makers responsible have to be informed depending on the extent to which the limits are exceeded and the approach taken to remedy the situation.
Credit Risk Management Process Credit risk management process should cover the entire credit cycle starting from the origination of the credit in a financial institution’s books to the point the credit is extinguished from the books (Morton Glantz, 2002). It should provide for sound practices in: Credit Processing/Appraisal Credit processing is the stage where all required information on credit is gathered and applications are screened. Credit application forms should be sufficiently detailed to permit gathering of all information needed for credit assessment at the outset.
In this connection, financial institutions should have a checklist to ensure that all required information is, in fact, collected. Financial institutions should set out pre-qualDhaka ation screening criteria, which would act as a guide for their officers to determine the types of credit that are acceptable. For instance, the criteria may include rejecting applications from blacklisted customers. These criteria would help institutions avoid processing and screening applications that would be later rejected. Moreover, all credits should be for legitimate purposes and adequate processes should be established to ensure that financial institutions are not used for fraudulent activities or activities that are prohibited by law or are of such nature that if permitted would contravene the provisions of law.
Institutions must not expose themselves to reputational risk associated with granting credit to customers of questionable repute and integrity. The next stage to credit screening is credit appraisal where the financial institution assesses the customer’s ability to meet his obligations.
Institutions should establish well designed credit appraisal criteria to ensure that facilities are granted only to creditworthy customers who can make repayments from reasonably determinable sources of cash flow on a timely basis (Morton Glantz, 2002). Financial institutions usually require collateral or guarantees in support of a credit in order to mitigate risk. It must be recognized that collateral and guarantees are merely instruments of risk mitigation. They are, by no means, substitutes for a customer’s ability to generate sufficient cash flows to honor his contractual repayment obligations.
Collateral and guarantees cannot obviate or minimize the need for a comprehensive assessment of the customer’s ability to observe repayment schedule nor should they be allowed to compensate for insufficient information from the customer. Care should be taken that working capital financing is not based entirely on the existence of collateral or guarantees. Such financing must be supported by a proper analysis of projected levels of sales and cost of sales, prudential working capital ratio, past experience of working capital financing, and contributions to such capital by the borrower itself. Financial institutions must have a policy for valuing collateral, taking into account the requirements of the Bangladesh Bank guidelines dealing with the matter. Such a policy shall, among other things, provide for acceptability of various forms of collateral, their periodic valuation, process for ensuring their continuing legal enforceability and realization value (Morton Glantz, 2002).
In the case of loan syndication, a participating financial institution should have a policy to ensure that it does not place undue reliance on the credit risk analysis carried out by the lead underwriter. The institution must carry out its own due diligence, including credit risk analysis, and an assessment of the terms and conditions of the syndication.
Matters regarding recovery of loans by financial institutions are covered by this statute. This is apparent from the preamble of this statute given at the very beginning of this Act prior to section 1 and also from the section 5. Please note that, these matters are regarded as matters of civil nature (section 11(5) of ARAA). Irrespective of Public Demand Recovery Act (PDRA) 1913, if the loan is recoverable under ARAA then it has to be recovered using the Artha Rin Adalat no matter whether this loan is considered as 'Public/Government Loan' section 5(5) of ARAA. However, cases involving claims by Bangladesh Krishi Bank and Bangladesh Krishi Unnoyon Bank and other state-owned financial institutions not exceeding the amount of taka 5 lacs can be filed as certificate case using the PDRA 1913 instead of filing in Artha Rin Adalat section 5(5) of ARAA.
If there are special provisions for recovering loan by financial institutions established by special law, then the ARAA provisions will be counted as additional to those provisions. However, if that financial provision files a case in Artha Rin Adalat for recovering loans, then the ARAA will be applicable section 5(6) of ARAA. Loans recoverable by this statute: Loans given to the Government by the following institutions section 2Ka (12-17) are not recoverable by the Artha Rin Adalat: International Finance Corporation Commonwealth Development Corporation Islamic Development Bank Asian Development Bank International Bank for Reconstruction and Development International Development Association However, appropriation of money by the officers or employees of a financial institution cannot be entertained with this act (section 18(1) of ARAA). Mortgage suit for sale or foreclosure of immovable property in pursuant to section 67 of The Transfer of Property Act 1882 and Order XXXIV of CPC has to be filed in the Artha Rin Adalat and the procedures laid down in CPC and ARAA have to followed in combination, so far as it is possible under section 5(2) of ARAA. The loan-receiver cannot file a case against the financial institutions under this statute. Neither he can counterclaim or put any claim of set off against the financial institution while filing the written statement (section 18(2) of ARAA).
On any case pending in any other court by the loan receiver being plaintiff cannot be heard analogously with the case filed by the financial institution against that loan receiver in Artha Rin Adalat and vice versa. Neither it is possible to stay the case under Artha Rin Adalat on that ground (section 18(3) of ARAA). Relevant court: All the matters under this statute, as long as it is regarding recovery of loans by financial institutions, has to be entertained by Artha Rin Adalat of the relevant district. The judge of the Artha Rin Adalat is a Joint District Judge (Section 4 & 5) Procedures to be followed for filing and running cases under this statute: It must be borne in mind that as the matters covered by this statute are of civil nature, therefore, the Code of Civil Procedure (CPC) is the prime code that has to be followed regarding procedural issues.
If this is so, then the relevant steps for a civil case/suit under CPC are to be complied with for cases under Artha Rin Adalat Ain 2003. The normal steps for a civil suit that are to be followed for cases under Artha Rin Adalat Ain 2003 are: Proceeding Stage: I) Issue of Plaint/ Institution of Suit: 2) Issue of Summons/Process: 3) Service of Summons: 4) Return of summons and filing of written statements: 5) First Hearing and Court's Examination of the Parties: 6) Section 30 steps: 7) Framing Issues: 8) Settling a date for hearing: These days, the abovementioned stages 5, 6 & 8 are not the norms. Normally on the day of framing issues the court fix a date for final or peremptory hearing and then the trial stage begins without the need for fixing a separate date for settling a date for hearing. Trial Stage: 1) Peremptory Hearing: a) Opening of the case b) Examination in Chief c) Cross-examination d) Re-Examination 2) Arguments Post-Trial Stage: 1) Judgement 2) Decree (to be continued) Barrister Muhammad Tanvir Hashem Munim is the Head of his own Chamber known as 'Munim and Associates.
Only financial institutions not anyone can file a case under the the ARAA 2003 for recovery of debts. Now, funded liability, so far I understand it, is that a person saves/invests/funds a certain amount for a liability he will incur in future as he has already promised it. This directly does not happen in financial institutions. However, if viewed from the perspective of a consumer taking loan which is essentially a funding by the institution and liability for the consumer, yes, a financial institution can sue. In case of non-funded liability, a civil suit can be brought by way of common law doctrine of estoppel due to the acceptance of the liability. 'O you who have believed, fear ALLAH as He should be feared and do not die except as Muslims in submission to Him. And hold firmly to the rope of ALLAH all together and do not become divided.
And remember the favor of ALLAH upon you - when you were enemies and He brought your hearts together and you became, by His favor, brothers. And you were on the edge of a pit of the Fire, and He saved you from it. Thus does ALLAH make clear to you His verses that you may be guided'. (Surah: Aal-I-Imraan. Verse: 103-104).
1 nefsearch September 2012 Issue 3 INSOLVENCY IN NEPALI CONTEXT 2 2 nefsearch September 2012 INSOLVENCY IN NEPALI CONTEXT Nepal s first codified law, the Muluki Ain, was put into practice in It took the country a good 150 years after this to establish and enact the Insolvency Act in 2006, a step that is now considered to be a milestone in the process of modernizing commercial law in Nepal. Previously, bits and pieces of the laws that make up the Insolvency Act were scattered throughout various items of legislation. History The concept for the Insolvency Act originally began in 1853 with the establishment of the Personal Bankruptcy Law that stemmed from the Muluki Ain. However, due to flaws present in the act, the process for the new Insolvency Act started in 2002 with the aid of a technical assistance grant from the Asian Development Bank. A major shortcoming in the old regime was that it did not have any provisions for the reorganization of insolvent companies. As a result, companies facing financial difficulties had no alternative to liquidation. Furthermore, the old law provided no qualifications for liquidators and there was no regulatory authority to supervise the insolvency proceedings.
Apart from these major flaws in the old Act, the Judiciary also lacked an Insolvency Administrative Office. The need for a unit devoted specifically to insolvency matters was soon seen as a major necessity. Today, the Act is based on the principle of one law, two systems and it covers laws for both liquidation and rescue and restructuring. Situation Report Since the inception of the Insolvency Act in 2063 (2006), very few companies have been willing to step forward and begin official insolvency proceedings. It is important to note that the Insolvency Act and its regulations were introduced at different times. The lack of synergy during this process has not helped the current predicament of companies that should be (but aren t) pursuing insolvency proceedings. Without sufficient data on INSOLVENCY & LIQUIDATION What s the Difference?
When a company enters liquidation, it enters a process of termination in which the company s assets are used to discharge it from its liabilities. Insolvency occurs when an individual or company is unable to meet its financial obligations to its creditors or when a company s liabilities exceed its assets. Insolvency can lead to legal insolvency proceedings, the outcome of which can be restructuring, or liquidation. Insolvency proceedings do not necessitate liquidation. 3 Insolvency in Nepali Context 3 insolvency proceedings, it is difficult for experts and lawmakers to accurately discern solutions to persisting problems. The most prominent company to have begun proceedings is Nepal Development Bank.
The implementation of the Act in this case shows that the Act unsatisfactory. Even if companies do begin insolvency proceedings, their respective situations are bound to be complicated due to different legislations that clearly contradict each other, such as the contradictions between the Insolvency Act and the Banks and Financial Institutions Act (BAFIA). Clearly, conflicts such as these have created hurdles for all parties involved and require a court hearing to clarify which Act supersedes the other. Another major problem in insolvency proceedings is the belief that insolvency is the result of criminal acts by individuals or companies.
However, the fact is that filing for insolvency is not necessarily the result of a criminal act. Because insolvency is perceived as a crime in Nepal, many companies that in principle should file for insolvency do not.
Another significant problem lies in the inadequate monitoring of companies by Company Registrar s Office (CRO) as a result many companies that should file for insolvency go unnoticed. These companies prefer to abandon operate rather than file for insolvency. Even though a few companies have filed for insolvency and are undergoing liquidation, the current situation, with respect to insolvency procedures is not ideal. A careful and thorough analysis of the shortcomings in the Insolvency Act is necessary so that a viable solution is found and applied effectively. The key question we must ask is this: why are insolvent Nepali companies not coming forward to begin insolvency proceedings?
Current Challenges The Insolvency Act needs to be refined before it reaches a standard that proves to be both efficient and effective. The push to reform the Act must come from the Nepali business community; unfortunately discussions on insolvency laws are avoided.
Insolvency Practioners believe that there are three factors that lead to the insolvency of banks and financial institutions in Nepal - bad management, bad policy and bad luck, with bad management being the primary culprit. In the case of Nepal Development Bank insolvency resulted from an asset-liability mismatch. The main reason for this mismatch is related party lending, where the borrower is connected to the management, leading to fraudulent transactions. Data from liquidated companies show that 26% suffered from poor supervision and the lack of a regulatory body, 20% had defective bank management, 11% were victims of political influence, and 15% fell to lending and fraud.ii A major shortcoming in the Insolvency Act is the number of contradictions it holds with other acts. There are contradictory three factors that lead to the insolvency of banks and financial institutions in Nepal - bad management, bad policy and bad luck, with bad management being the primary culprit. Clauses in the Banks and Financial Institutions Act (BAFIA) and the Insolvency Act. While BAFIA states that individual depositors will be the first recipients of any payout, the Insolvency Act states that employees and other liabilities will be the first.
2 As there is no supremacy of laws, it results in obvious conflicts partiesand confusion between parties before a court hearing to determine the procedure to be followed. One of the reasons behind such gaps is the fact that the Act is based on the Insolvency Acts of other countries; it lacks flexibility and practicality required for the Nepali context. Since insolvency is not a readily accepted practice, it is very difficult to point out flaws. The lack of practice also reveals other problems with the legal document and legal officials who deal with the process of insolvency. Due to a lack of practice, there is a shortage of both liquidators and judges who are trained and equipped to handle insolvency related cases.
Commercial laws are still a budding concept in Nepal and not all the judges in the Judicial System are educated on issues like insolvency and liquidation. Further aggravating this problem is a rule that reshuffles judges in a trial meaning 4 4 nefsearch September 2012 that one insolvency trial can have several judges.
This has led to even further confusion and conflict. The success of the Insolvency Act will largely be dependent on how it is implemented. There are certain positive steps being taken to ensure smoother insolvency procedures; lawyers and judges are being trained and a separate commercial bench has been created too. Still, there are very few companies that have filed for insolvency. This raises the question whether insolvency is unpopular due the stigma attached to it or because the process in itself is a hassle. The legal provision for insolvency is not discretionary and the measure of one-size fits all is creating problems with the liquidation of different types of companies.
Another problem is the lack of public awareness. Misinformation creates major misunderstandings and gaps in knowledge.
For example, the general public presumes that a bank audit is always bad news and in anticipation, can lead to unnecessary mass bank runs. What a lot of people do not understand is that an unscheduled bank audit is completely normal and not always a cause for alarm. Additionally, companies fear being blacklisted when they are declared insolvent. Government and Regulator s Perspective Insolvency practitioners in Nepal have been expressing the need to smoothen the process of restructuring of insolvent companies. Government officials and regulators have expressed similar views, Table 1: Country Profile Average time taken to resolve insolvency (yrs) urging that reforms be made to the current Insolvency Act to avoid future problems. Although the provision for blacklisted is meant to identify frauds and those associated with it, regulators are willing to consider waiving the provision of being blacklisted if companies willingly declare themselves insolvent.
Nepal Rastra Bank (NRB) could also encourage troubled financial institutions to merge or be acquired by a stronger one instead of directly liquidating them. Country Profiles Nepal has shown significant improvement in regards to its procedures for insolvencies in the nation, but how exactly does Nepal fare in terms of the South Asian community? The three following country profiles provide a summary of the different procedures used by the respective countries. Furthermore, there are flaws in their system that the Nepali Act must try to avoid as well as identify beneficial aspects of their laws that the Nepali Act should emulate.
Sri Lanka The Sri Lankan procedures for insolvencies are largely similar to that of India 3 Sri Lanka 4 Bangladesh 5 South Asia Cost (% of estate) Recovery Rate (cents on the dollar) Nepal. The same issues recur with respect to financial transparency and bad accounting practices. However, there are a few notable exceptions that could be responsible for explaining Sri Lanka s above average performance in this particular area (in relation to South Asia). Sri Lanka currently ranks 42nd in the world in terms of resolving insolvencies, the time taken to resolve insolvencies is much less than the rest of South Asia, and the recovery rate (cents on the dollar) is much higher. Through reforms in 2007, the Sri Lankan government has sought to introduce a rescue culture into the business environment. They have done this by taking the model of British financial legislation.
7 Under Sri Lankan law, debtors that file for insolvency can go into administration. 8 Administration is a process in which the Board of Directors of the company can appoint an administrator to bring the company s head above water again.
This reform has been said to give incentives to rescue companies rather than liquidate them, fostering the aforementioned rescue culture. India Amongst South Asian countries, India 5 Insolvency in Nepali Context 5 The Nepali Act must do what Sri Lanka did when they passed their Companies Act in By passing this act, Sri Lanka identified a systemic problem and repaired it with a simple, progressive piece of legislation that fit neatly into their culture. And Nepal are the two exceptions where insolvency law reforms have not received the required attention and priority. 9 However, the Indian act has some laws that would benefit the Nepali act. The Indian insolvency act, more commonly known as the Provincial Insolvency Act, has provisions where the court can set aside some property to the insolvent so that he is able to support himself and his family. This means that if a person were to become insolvent, their assets would only be seized insofar that they could still house their family. Also, in order to avoid fraudulent behavior, the Indian court has the power to charge the creditor a fine of INR 1000 (NPR 1600 or USD 19.4) if the court feels that the charged petition was frivolous and false.
10 This fine is made to the debtor as a compensation for the injury caused to him and his company during the trial. In order to maintain the debtor s security, the act also has a protection order. This is when the debtor, to keep himself clear of chances of imprisonment during the case, can file for a protection order. However, any creditor of his is entitled to appear and oppose the grant for a protection order without sufficient evidence as to why.
Bangladesh Compared to the rest of South Asia, Bangladesh has not done well in terms of resolving insolvencies. Data given by the World Bank illustrates that Bangladesh is lagging behind in regional averages in almost every single category. However, the Bangladeshi government has made attempts at reforms. The Artha Rin Adalat Act of 2003 sought to create separate courts for the speedy recovery of loans, but no mention has been made as to whether the Bangladeshi business culture seeks to rescue ailing companies or whether it favors asset recovery through liquidation. Furthermore, it appears that the creation of separate courts for dealing with insolvency has neither made the process particularly speedy (in relation to the rest of South Asia), nor has it helped the recovery rate. Conclusion Given the three country profiles, Nepal must ask the question: What can we learn from our neighbors?
It is clear that the insolvency laws in India, Bangladesh and Sri Lanka are not perfect, but Nepal must learn what it can from them and adopt it in a framework that will suit the Nepali context. Perhaps the Nepali laws may need provisions, similar to that of the Bangladeshi laws for the creation of separate bankruptcy courts in order to speed up the entire insolvency process.
An in-depth analysis should be done with regards to Sri Lanka and why they are faring so much better in this area than all other South Asian countries. The Nepali Act must do what Sri Lanka did when they passed their Companies Act in 2007 where Sri Lanka identified a systemic problem and repaired it with a simple, progressive piece of legislation that fit neatly into their culture. In the process of amending the Nepali system, some thought should be given to adopting some of the better provisions found in Indian insolvencies laws as these two respective national cultures are fairly similar. In order to find out what provisions can be adopted from these respective neighbors, more research is needed to ascertain the positive aspects found in each country s insolvency practices. We must also be vigilant in researching the areas in which their insolvency laws have failed, so that we do not repeat their mistakes. On the other hand, the principal goal must be failings make the process of insolvency more efficient and molding laws to fit Nepali culture.
6 6 nefsearch September 2012 OUTLOOK The immediate future, with respect to the process of insolvency, in Nepal seems to be full of hurdles and confusions. Reforms have previously been either excruciatingly slow or nonexistent. This has been further exacerbated by the CA s recent failure to ratify a constitution, thus throwing Nepal s political future up in the air. With such political volatility, it is not a great surprise that reforms have not been passed. Owing to these conditions, the legislation (and its implementation and regulation) is inconsistent as well. In order to combat these failings, swift actions must be taken by the private and public sectors.
The process of insolvency can only be made more efficient through progressive reforms of the existing Insolvency Act. In order to make progressive reforms, one must review and update laws constantly; an update once every decade will not suffice.
Reforms must be made in legislation and in the Nepali business culture. The following points are aspects of legislation and business culture that must be reformed: needs to be raised in order to help all parties understand the existing legal framework and overcome misunderstandings.
Remove the many ambiguities that are currently present. Practioners in matters of insolvency are paramount to the success of any insolvency laws. To be present at all times. This will help keep rulings on the case consistent and it should also make the process smoother for all parties involved. Company on a routine basis to prevent fraudulent actions and behavior.
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Furthermore, internal management should also be subjected to random audits. Process so as to identify companies that need to file for insolvency.
Facing insolvency. Essary to identify frauds, should be removed with regards to voluntary declarations of insolvency. It may be a step in the right direction to break the stigma regarding insolvency proceedings.
Artha Rin Adalat Ain 2003 Free Download
Updating insolvency laws to fit the contemporary climate of the country. Laws need to be progressive; if they are static, they will simply be ineffective. Even though it has only been tested a few times and there are some positive steps being taken to make the implementation more efficient, the Insolvency Act Nepalmust be progressively updated. A rescue culture, much like the one fostered in a rapidly growing Sri Lanka, must be encouraged. This may help preserve failing businesses and institutions.
Artha Rin Adalat Ain 2003 English Version Pdf
The rescue of companies can be beneficial for all parties:- the creditors may, in the long-term, regain the value of the amount they lent and debtors could have another shot at prospering. A solid, progressive and contemporary legal framework for insolvency proceedings is in the best interest of every Nepali, should they land on either side of the procedure. 7 Insolvency in Nepali Context 7 ENDNOTES 1. Bharat Raj Upreti, Latest Trends and Developments in the insolvency law in Nepal (paper presented at the Fifth Forum for Asian Insolvency Reform (FAIR), Beijing, China, April 27-28, 2006). Ministry of Commerce and Supplies, Government of Nepal, Insolvency Act, 2063 (4th November 2006), English/insolvency-act.pdf.
Ease of Doing Business in India, last modified 2012, 4. Ease of Doing Business in Sri Lanka, last modified 2012, 5. Ease of Doing Business in Bangladesh, last modified 2012, doingbusiness.org/data/exploreeconomies/bangladesh#resolving-insolvency. Resolving Insolvency, last modified 2012, data/exploretopics/resolving-insolvency.
Kandiah Neelakandan, Restructuring Companies in Sri Lanka (paper presented at the LAWAISA Conference, New Delhi, India, November 12-14, 2010) The Department of the Registrar of Companies, Government of Sri Lanka, Companies Act, c21be7d8/$FILE/Act%207%20of%202007%20(English).pdf 9. Sumant Batra, Insolvency laws in South Asia: Recent Trends and Developments (paper presented at the Fifth Forum for Asian Insolvency Reform (FAIR), Beijing, China, April 27-28, 2006). Ministry of Corporate Affairs, Government of India, Provincial Insolvency Act, This nefsearch is based on the research and analysis carried out by the nefsearch team. It also incorporates the proceedings of the neftalk Insolvency in Nepali Context, a talk program jointly organized by Nepal Insolvency Practitioners Association (NIPA) and Nepal Economic Forum (NEF) on 02 May NIPA is an association of professionals committed to creating awareness in the field of insolvency. The keynote speakers at the neftalk were Justice Bharat Upreti, Judge, Supreme Court, Bhesh Raj Sharma, Secretary, Ministry of Law and Justice, Maha Prasad Adhikary, Deputy Governor, Nepal Rastra Bank and Narayan Bajaj, Liquidator, Nepal Development Bank and Member, NIPA.
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8 Issue 4, September 2012 I Publisher: Nepal Economic Forum I P. Box 7025, Krishna Galli, Lalitpur-3, Nepal I Phone: nefsearch team: Akrit Sharma, Shayasta Tuladhar, Shreyansh Malla, Shristi Singh Design: Big Stone Medium.
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