KATHMANDU, Aug 19: The government, in a bid to regulate savings and credit cooperatives, has introduced a provision to impose fines ranging from Rs 500,000 to Rs 1.5 million on organizations that fail to comply with state regulations.
According to the National Cooperative Regulatory Authority (NCRA), the newly formed body tasked with overseeing the sector, necessary laws are being devised to streamline the operations of savings and credit cooperatives. The government established the NCRA in January to address the problems affecting cooperatives and their depositors.
Shesh Narayan Poudel, executive director of the NCRA, said the authority is in the process of preparing regulations, supervision procedures, and the necessary technology for cooperative organizations. “With additional resources, the NCRA will conduct on-site inspections of problem-oriented cooperatives, while continuing off-site regulation of others,” Poudel said at a press meet on Monday.
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He added that the authority is working to implement registration standards specifically for cooperatives engaged in banking activities. “The authority will soon launch dedicated software for this purpose,” he noted.
Meanwhile, the government has made it mandatory for all savings and credit cooperatives to register with the NCRA. The provision, introduced amid multiple embezzlement cases in the sector, is expected to take effect by mid-September.
There are over 34,000 cooperatives operating in the country, with around 3 million members. Of these, the federal government has declared more than two dozen as crisis-ridden, collectively owing approximately Rs 35 billion to depositors.
Over the past decade, the government formed several panels to investigate the poorly regulated sector. Recently, a special parliamentary probe panel led by lawmaker Surya Bahadur Thapa recommended the establishment of a strong regulatory body to oversee cooperatives.
The High-Level Economic Reform Recommendation Commission, led by former finance secretary Rameshore Khanal, also emphasized the need for urgent regulation in its report submitted in April. The commission’s 11-point recommendations highlighted cases such as an individual depositing Rs 900 million in cooperatives without any verifiable source of funds.
In line with tightening oversight, the government last week directed all cooperatives to submit detailed reports under anti-money laundering laws. The Ministry of Federal Affairs and General Administration wrote to all local units seeking comprehensive data on cooperatives operating within their jurisdictions. Cooperatives have also been instructed to maintain accurate ‘know your customer’ details and update their ‘know your member’ records.
