KATHMANDU, Sept 22: Saving and credit cooperatives will not be allowed to collect more than 14.75 percent interest on their loans.
With the decision of the Department of Cooperatives to fix a new cap on the lending rate, cooperatives across the country will be restricted from charging interest rates higher than 14.75 percent on the loans they float to their members.
The new cap imposed by the department upon the recommendation of a committee formed to fix the reference interest rate will, however, come into effect from November 1.
The new reference rate fixed by the department upon the recommendation of the committee is 1.25 percent lower than the current upper limit.
Earlier in mid-July last year, the department had fixed a cap of 16 percent on the lending rate for cooperatives. The committee decided to revise the cap and recommend the new reference rate to the department.
The department has set the reference rates for cooperatives in line with the provision in the ‘Cooperatives Regulation, 2019’ and the ‘Cooperatives Act 2017’.
The Act entrusts the authority to the registrar of the department to fix the reference interest rates for cooperatives upon the recommendation of a nine-member committee. Such committee headed by the registrar includes a representative from the Ministry of Finance, Nepal Rastra Bank, National Cooperative Development Board, National Cooperative Federation of Nepal, and National Cooperative Bank Ltd, among others.
There are over 13,578 saving and credit cooperatives across the country, according to the data of the department as of Fiscal Year 2016/17. They have mobilized a total of Rs 179.88 billion in loans to their members. These cooperatives have a total of 3.45 million members.