As per the recent tripartite understanding reached among MoF, NRB and DoC, the central bank has agreed to extend technical support to enhance the inspection and supervision capacity of DoC to look into the accounts of cooperatives, which have largely been unregulated by professional agency so far, an official of MOF informed myrepublica.com.
"The NRB officials will help the DoC officials to formulate the inspection regulations as well as setting standard of accounts that the cooperatives are required to maintain," said the official.
Formulation of inspection regulations, and compilation of vital statistics related to financial activities and putting them in a standard format is one of the first tasks that the DoC has to do to kick start inspection and supervision activities, the official added.
Both site and off-site inspection of selected cooperatives based on major cities will be initiated only after the issuance of inspection regulation, the official informed. "To start with, the government is planning to select some 20 cooperatives based on their activities and size of deposit mobilization and bring them into direct supervision of DoC," said the official.
Similarly, MoF has also agreed to provide additional budget that the DoC may require to implement the agreed activities. "We have assured DoC officials that there will be no short of resources for the proposed activities and asked the DoC to forward estimated budget for the purpose," said the official.
DoC, last week, issued a notice to all cooperatives, imposing first-ever cap on land and housing loans that they have been extending. As per the notice, cooperatives are required to limit their real estate loan exposures to 15 percent of their total loans portfolio by mid-July 2012 and further 10 percent within the next fiscal year. Similarly, the ratio of total loan exposure to real estate and housing will have to be brought to less than 35 percent within the next two years and further to 25 percent by mid-July 2013.
DoC has also asked the cooperatives to maintain 10 percent liquidity of the total deposits and set single borrower limit at 10 percent of the total capital fund.
According to an estimate, saving and credit cooperatives operating in urban areas hold as much as Rs 50 billion as deposits of their members and two-thirds of the money have been invested in the housing and real estate business.
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