Stakeholders in the cooperatives sector have raised concerns over the enforcement of directives and standards by the Nepal Rastra Bank (NRB), arguing that the newly established National Cooperative Regulation Authority (NCRA) should assume responsibility for regulating the sector.
At a discussion hosted by the Nepal Society of Cooperative Journalists (CJN) on the topic of “Cooperative Ordinance, Directive, and Standards,” speakers highlighted the need for the NCRA to be given the authority to regulate cooperatives, rather than allowing the NRB to impose its standards.
Chairperson of the National Cooperatives Federation, Om Devi Malla, emphasized that the NCRA, now responsible for cooperative regulation, should be tasked with formulating its own directives and standards. “The establishment of the Authority was meant to regulate cooperatives, and it should be empowered to create its own instructions and standards,” Malla stated. She also criticized the government’s move to introduce a savings limit in the ordinance, calling it a violation of citizens’ freedom. Malla suggested that the Credit Information Centre should be established before the NCRA to better manage cooperative operations.
Chandra Prasad Dhakal, Chairperson of the Nepal Federation of Savings and Credit Unions (NEFSCUN), echoed Malla’s view, asserting that the NRB should refrain from issuing directives for cooperatives. “The Authority, which includes representation from the Rastra Bank, should now prepare the necessary standards and directives for the sector,” Dhakal said. He emphasized that while the laws surrounding cooperatives are sound, the sector faces challenges due to inadequate implementation. Dhakal also voiced his concerns about the ordinance’s omission of a provision for returning savings to depositors.
Uddhav Sapkota, Chairperson of the Bagmati Province Savings and Credit Federation, criticized the NRB’s directives, alleging they primarily served the interests of commercial banks. He warned that the enforcement of these directives could harm cooperatives, while banks would benefit. Sapkota also questioned the practicality of the savings limit and director tenure provisions.
Arjun Prasad Pokharel, Secretary at the Ministry of Cooperatives and Chair of the NCRA, defended the government’s stringent measures, explaining that the amendments to the ordinance were necessary to address the broader issues within the cooperatives sector. While acknowledging that some provisions could be amended, he stated that they could not be entirely removed. “The government must take decisive steps after diagnosing the problems in cooperatives to ensure the security of both depositors and lenders,” Pokharel said, adding that cooperatives must be credible, as financial institutions rely heavily on trust.
Participants at the program called for the immediate amendment of certain provisions of the ordinance, which they deemed impractical. They specifically demanded the removal of the savings limits, arguing that they unfairly restrict cooperatives’ operations based on their scope. CJN Chair Kaji Shrestha presided over the event.
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