Apart from the specialized ones, large cooperatives should transfer at least 50 percent of the total loan to productive sectors including agriculture and industry
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Savings and loan cooperatives regulations have been issued with an interest spread of 6 percent and a maximum limit of 5 lakh rupees for unsecured loans. In the 'Instructions and Standards for Cooperative Institutions Dealing in Savings and Loans 2081' issued by Nepal Rastra Bank, there is a provision that members who have not 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 as a security for your savings.
cooperatives can invest in shares of cooperative banks and small farmers' microfinance institutions and bonds issued by the Nepalese government. Apart from this, no investment shall be made in shares/debentures of any other organization. However, it is mentioned in the criteria that this directive does not hinder the payment of the association's membership fee as per the Cooperative Act, 2074.
"Except for specialized organizations, organizations that do large transactions must transfer at least 50 percent of their total loans to productive sectors including agriculture, industry and business operation/expansion," the standard says, "Organizations that are not within the said limit must maintain such a limit by the end of June 2083." The organization can provide a suitable grace period for the payment of installments/interest while disbursing loans for the purposes of agriculture, industry and business.
The capital installment cannot be determined in an interval of more than three months after the completion of the grace period of any loan invested by the organization. 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 extend loans up to 90 percent of the member's savings. When disbursing loans on real estate mortgages, there is a system in which loans can be provided 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 institution shall disburse loans only on the mortgage of the borrower member himself or his single family. Before the issuance of this instruction, except for the mortgage of the member himself or his one-house family, the loan that has flowed into the mortgage of a third party must be regularized by the end of June 2083. The
organization can disburse loans up to 80 percent of the total project cost to the borrower member in installments only. The organization shall not grant loans on the security of the shares of its members for their membership. For the establishment and development of a potential project, the organization can issue loans in installments based on the progress of the project, keeping the same project as collateral. Loans disbursed by the organization should be classified into two types, active and passive loans based on installment/interest payment period. Loans not exceeding three months after exceeding the balance and disbursed for the protection of members' savings should be kept in the active category.
Non-performing loans include bad (debts past due for 3 to 6 months), doubtful (debts past due for 6 to 12 months) and bad (debts past due for more than 12 months). As stated, the classification of loans is in the prescribed loss regime. The deposit limit is also specified in the
criteria. Cooperatives can only collect savings 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 when 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). There is a system in the standard where deposits can be collected up to Rs.
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." 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 recovered only up to the cost to be paid to such institutions/bodies for that service.
The government has decided to establish a cooperative regulatory authority for the regulation of cooperatives and to return the sunk money of the savers in the ordinance brought in the second week of January. Through an ordinance, the government is going to repeal the National Cooperative Development Board Act, 2049. The National Cooperative Regulation Authority has been established according to the provision that the movable and immovable assets of the National Cooperative Development Board, including the assets, liabilities and employees working on the board will automatically transfer to the authority.
