KATHMANDU, Jan 14: Nepal Rastra Bank (NRB) is set to implement new regulations for cooperatives mobilizing savings and loans exceeding Rs 250 million annually. A draft of the guidelines, titled ‘Directives and Standards for Savings and Credit Cooperatives,’ is currently open for public feedback until January end.
The new directives cover various provisions, including financial resource mobilization, loan limits, capital fund regulations, and member protection. Cooperatives will face new restrictions on the amount they can collect in deposit per member, with a cap of Rs 1 million to Rs 5 million, depending on their scope of operation. Existing savings above this threshold must be adjusted within two years.
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Cooperatives will also need to disclose the source of savings exceeding Rs 1 million and will be required to maintain minimum liquid assets. In terms of loans, cooperatives can lend up to five times a member’s savings without collateral, subject to a guarantee from two other members. A 15 percent loan limit per member based on primary capital has been set.
For large-scale cooperatives, at least 50% of the total loans must be directed towards productive sectors such as agriculture, industry, and business. Furthermore, loans can only be provided against collateral from the borrower or immediate family members. Cooperatives will also have to classify loans as active or non-performing, with provisions ranging from 1 percent to 100% percent for non-performing loans.
Additionally, the NRB will set the interest rate spread at a maximum of 6 percent between savings and loans. Cooperatives must implement interest rates as determined by their boards, but monthly adjustments based on the NRB’s reference rate are required. The guidelines also prohibit family members from holding multiple positions in the same cooperative and limit directors to two consecutive terms.
The new regulations aim to bring greater accountability, transparency, and risk management to the cooperative sector.
