(1) If a bank or financial institution of lower class wishes to be converted into a bank or financial institution of one level higher class, it shall submit an application to the Rastra Bank alongwith the details as specified by the Rastra Bank.
Provided that class “D” institutions cannot be converted into a higher class.
(2) If the Rastra Bank deems appropriate, upon carrying out inquiry into the application and details enclosed with the application as set forth in Sub-Section (1), to convert a bank or financial institution as a bank or financial institution of a higher class, it may grant prior approval subject to the following terms and conditions:-
(a) That it has made payment of the paid up capital requirement for a bank or financial institution of a higher class as prescribed by the Rastra Bank,
(b) That it has been continuously maintaining the capital fund adequacy according to the Rastra Bank directives for the last five years, that it is in profit continuously for the last five years, and the average non-performing loans of the last five years are a within the limits as prescribed by the Rastra Bank,
(c) That the preliminary expenses have already been written off,
(d) That the shares to be issued publicly have been issued and already been allotted,
(e) That the General Meeting has already passed a special resolution for conversion into an upper class bank or financial institution,
(f) That it has met all the conditions as prescribed by the Rastra Bank.
(3) The Rastra Bank shall issue a license of an upper class bank or financial institution pursuant to this Act requiring to make amendments to the Memorandum of Association and the Articles of Association, of the bank or financial institution according to the prevailing laws having obtained prior approval pursuant to Sub-Section (2).