In an effort to strengthen oversight of the cooperative sector, the government has introduced a provision imposing fines between Rs 500,000 and Rs 1.5 million on savings and credit cooperatives that fail to comply with state regulations.
The National Cooperative Regulatory Authority (NCRA), established in January to address sector-wide issues and safeguard depositors, is spearheading this initiative. According to NCRA Executive Director Shesh Narayan Poudel, the authority is preparing regulations, supervision procedures, and technology-based systems to streamline cooperative operations.
“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.
Key provisions include:
- Mandatory registration of all savings and credit cooperatives with the NCRA (effective by mid-September).
- Introduction of dedicated software for cooperatives engaged in banking activities.
- Implementation of registration standards to ensure compliance.
- Enforcement of anti-money laundering measures, requiring cooperatives to submit detailed reports, maintain accurate “know your customer” (KYC), and update “know your member” (KYM) records.
Nepal currently has over 34,000 cooperatives with around 3 million members. However, the sector has been plagued by embezzlement cases, with more than two dozen declared crisis-ridden, collectively owing about Rs 35 billion to depositors.
Past reports have underscored the urgency of reforms:
- A special parliamentary probe panel, led by lawmaker Surya Bahadur Thapa, recommended forming a robust regulatory body.
- The High-Level Economic Reform Recommendation Commission, chaired by former finance secretary Rameshore Khanal, highlighted alarming lapses — including an instance of an individual depositing Rs 900 million in cooperatives without verifiable income sources.
In line with these recommendations, the government recently instructed local units to gather comprehensive data on cooperatives under their jurisdictions.
