For the first time, the National Bank has issued separate directives to cooperative banks.
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Nepal Rastra Bank has issued a separate integrated directive to the National Cooperative Bank along with various regulatory provisions. The directive, titled ‘Directive 2082 for Cooperative Banks, Licensed to Conduct Limited Banking Transactions’, mentions all the regulatory provisions including the paid-up capital of the bank.
The Nepal Rastra Bank has issued a separate directive to cooperative banks for the first time. The directive covers nine points, including provisions on paid-up capital and minimum capital fund, provisions on loan classification and loan losses, provisions on loan limits, provisions on accounting policies and financial statement format, provisions on risk management, provisions on institutional governance, provisions on mandatory balance/statutory liquidity, provisions on interest rates and financial resource collection, and miscellaneous matters.
Nepal Rastra Bank granted limited banking transaction license to the National Cooperative Bank in the month of Shrawan 2067 BS, based on Section 76 of the previous Cooperative Act 2048 BS and Nepal Rastra Bank Act 2058 BS. There is no provision regarding cooperative banks in the Act on Banks and Financial Institutions. However, Section 76 of the Rastra Bank Act stipulates that it is mandatory to obtain the approval of Nepal Rastra Bank to take deposits or give loans.
While granting the license, the Rastra Bank had imposed 35 conditions on this institution. Among these 35 points, one of the points was that cooperative banks would be regulated like microfinance institutions. Because of this provision, the NRB has been regulating cooperative banks like microfinance, says spokesperson Guru Prasad Poudel. ‘The directive currently issued for cooperative banks includes nine provisions related to that bank,’ he said.
