KATHMANDU, Dec 8: The Department of Cooperatives has barred the primary cooperatives from taking service fees not more than one percent of the loan amount from the borrowers.
The sector’s regulator has capped the upper limit of the service fee following the discussion with the stakeholders on Monday. According to the Department, the meeting with National Cooperative Federation of Nepal, Nepal Federation of Savings and Credit Central Cooperative Unions, Nepal Multipurpose Central Cooperative Union, Nepal Agriculture Cooperative Central Federation and National Cooperative Bank reached the consensus to enforce the new rule that will come into effect from January 14.
Regarding the cooperatives issuing micro credit against group guarantee, the threshold has been maintained at a maximum of 1.5 percent. Apart from the prescribed service fee, cooperatives cannot charge money from their members under any other headings such as processing fee, administrative charges and extra charges, among others, after the new provision comes into effect.
According to the officials at the Department, such a measure has been taken following growing complaints that the cooperatives have been extracting rampant fees from their members while issuing loans.
Few months ago, the Department had capped the lending rate for cooperatives at 14.75 percent.
The Department has also fixed the maximum interest rates spread of a cooperative to six percent, which means that the difference between the deposit and loan rates of a cooperative should be below six percent.