KATHMANDU, April 6: Nepal Rastra Bank (NRB) has issued new directives for cooperatives engaged in savings and loan activities. The central bank introduced the Directives and Guidelines 2081 under the authority granted by Section 5(9) of the NRB Act, 2002 and Section 151(9) of the Cooperatives Act, 2017.
The new directives set limits on the amount a cooperative can collect from individual members, depending on its area of operation. Cooperatives operating within a single district can accept up to Rs 1 million per member. Those covering more than one district can collect up to Rs 2.5 million, while cooperatives with a jurisdiction extending across multiple provinces can accept up to Rs 5 million per member. Deposits that exceed these thresholds and were made before December 29, 2024, must be brought within the prescribed limits within two years from that date.
Under the new rules, cooperatives can operate ordinary, regular, and periodic savings accounts with terms of up to three years. However, regular savings must account for at least 25 percent of the total savings. Additionally, the procedures for accepting savings must be approved by the cooperative’s general assembly before being implemented. If any member deposits more than Rs 1 million, they must disclose the source of the funds.
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To monitor compliance with financial resource mobilization limits, NRB will use the cooperative's primary capital fund, total capital fund, and assets recorded in the previous quarter as the basis. Cooperatives are only allowed to collect deposits from members, and total savings must not exceed 15 times the amount of the primary capital fund. They may borrow up to 5 percent of their total assets but cannot exceed 100 percent of their capital fund in borrowings.
The directives also place restrictions on lending and investment practices. Cooperatives are barred from offering loans or making investments to members who have not completed at least three months of membership. Individual members can borrow up to 15 percent of the cooperative’s primary capital fund. For members with regular savings, cooperatives can issue collateral-free loans of up to five times their savings or a maximum of Rs 500,000, whichever is lower. However, such loans must be guaranteed by at least two other members.
In terms of investments, cooperatives are allowed to invest in shares of licensed cooperative banks and small farmer microfinance institutions, as well as in government-issued bonds. They are prohibited from investing in the shares or debentures of any other institutions. However, payments made as membership fees to cooperative federations in accordance with the Cooperatives Act, 2017 will not be considered a violation of these guidelines.
Cooperatives that have been continuously profitable for the past three years, have no accumulated losses, and meet the required minimum capital fund are permitted to purchase or construct office buildings. However, such purchases must be made through a transparent, competitive process. The investment must not exceed 25 percent of the primary capital fund or 50 percent of the reserve fund, whichever is lower. If these conditions are violated, the invested amount will be excluded from the calculation of the primary capital. Moreover, the property purchase must be approved by at least 51 percent of the general assembly, and details must be submitted to the regulatory authority within 30 days.
The guidelines also require that at least 50 percent of a cooperative’s total funds be allocated to productive sectors such as agriculture, industry, and business operations or expansion. Cooperatives that have not met this requirement must ensure compliance by mid-July 2026.
