The norms for the regulation of savings and loan cooperatives have been issued with the interest spread of savings and loans at 6 percent and the maximum limit of unsecured loans at 5 lakh rupees. In the 'Instructions and Standards for Cooperative Institutions Dealing in Savings and Loans 2081' issued by the Nepal Rastra Bank, there is a provision that members who have been a member of the institution for at least three months are not allowed to invest in loans.

"The organization will not be able to provide loans for a maximum of 15 percent of the primary capital per member. To a member who is saving regularly, only an amount equal to five times of his savings amount or a maximum of five lakhs, whichever is less, can be given an unsecured loan. You will not be allowed to take any type of additional loan except for the loan and the loan received to protect your savings.

cooperatives will be able to invest in the shares of cooperative banks and small farmers' microfinance institutions and in bonds issued by the Government of Nepal. Apart from this, no investment in shares/debentures of any other organization will be permitted. But it is mentioned in the criteria that this directive does not hinder the payment of the association's membership fee according to the Cooperative Act, 2074.

"Except for specialized organizations, organizations that do large transactions must transfer at least 50 percent of the total loan to productive sectors including agriculture, industry and business operation/expansion," the standard says, "Organizations that are not within the said limit must have maintained such a limit by the end of June 2083 . The institution may provide a suitable grace period for payment of installments/interest while disbursing loans for the purposes of agriculture, industry and business.

The institution may not determine installments of capital more than three months after the completion of the grace period of any loan invested by the institution. While setting such a grace period, there is a provision in the standard that the board of directors should approve the grace period according to the purpose of the loan. The

organization will be able to provide loans up to 90% of the member's savings. In the case of real estate mortgage loans, it is possible to provide loans up to a maximum of 60 percent of the mortgage valuation in sub-metropolitan and metropolitan cities and up to 70 percent in the case of mortgages in cities and rural municipalities . The organization has to provide loans only on the mortgage of the borrower member himself or his single family. Before the issuance of this instruction, the loan that has been transferred to the mortgage of a third party, other than the mortgage of the member himself or his one-house family, must be regularized by the end of June 2083. The

organization can disburse loans up to 80 percent of the total project cost in installments only to the borrower member under the project security. The organization may not issue loans on the security of shares for the membership of its members . For the establishment and development of a potential project, the organization can provide loans in installments based on the progress of the project so that the same project remains as collateral.

The loan disbursed by the organization has to be classified into two types of active and passive loans based on the installment/interest payment period . Loans within three months of overdraft and for the protection of members' savings should be kept in the active category .

Non-performing loans include bad (loans overdue for 3 to 6 months), doubtful (loans overdue for 6 to 12 months) and bad (loans overdue for more than 12 months). As mentioned, the classification of loans is in accordance with the prescribed loss regime. The deposit limit is also specified in the

criteria . Cooperatives can collect savings only from members. The organization will be able to collect savings up to 15 times of the primary capital fund. The organization can borrow up to five percent of its total assets from banks and financial institutions and cooperative banks. But while taking a loan in this way, it is not allowed to borrow more than 100 percent of the capital fund," the standard says, "but in the case of a cooperative organization that invests 51 percent or more in collective deposits, it can borrow up to 20 percent of the total assets or 10 times the capital fund (whichever is less).'

Deposits up to 50 lakh rupees can be collected in the standard.

'The organization can operate ordinary, regular and periodical types of savings accounts up to three years . But the portion of regular savings must be maintained at a minimum of 25 percent of the total savings,'' the standard says, 'The procedure for operating the savings accepted by the organization must be approved by the general assembly.'

organization will have to decide and implement the board of directors of the organization regarding the interest rate, interest calculation method, method of imposing damages and administrative service fee on the savings collected from its members. No fees other than administrative service fee, interest and compensatory interest may be charged while disbursing

loans . However, in terms of taking services through other institutions/bodies like Karja Information Center Limited for member borrowers, the service fee can be charged only up to the cost to be paid to such institutions/bodies for that service .