The government is preparing to remove the individual savings limit in savings and credit cooperatives through a replacement bill, just two months after introducing the provision via an ordinance.
In late December, the government amended the Cooperative Act through an ordinance, capping individual savings in cooperatives between Rs 1 million and Rs 5 million, depending on their operational scope. Cooperatives operating in multiple provinces were allowed a maximum individual savings limit of Rs 5 million, while those operating in multiple districts had a cap of Rs 2.5 million. Cooperatives functioning within a single district were limited to Rs 1 million. The ordinance had provided a two-year implementation period, but the government has now proposed amending it within two months.
On March 10, Minister for Land Management, Cooperatives, and Poverty Alleviation Balram Adhikari registered a replacement bill seeking to remove the savings limit. The bill proposes allowing members to save up to 10 percent of a cooperative’s primary capital fund instead of following a fixed upper limit.
Cooperative organizations had been lobbying against the savings cap, and their opposition played a key role in the government's decision. The National Federation of Cooperatives and the Nepal Savings and Credit Central Cooperatives Association (NEFSCUN) had formally submitted a memorandum to Minister Adhikari demanding its removal. Adhikari, who previously stated that the savings limit could be revised, has now proposed linking the cap to a cooperative's capital rather than imposing a fixed amount.
According to high-ranking ministry officials, cooperative activists exerted pressure to amend not only the savings limit but also the tenure restriction for cooperative board members. “Cooperative activists pushed for changes to the savings limit and director’s tenure,” said a senior official at the ministry. “The replacement bill has been introduced to address their concerns.”
The ordinance had barred individuals from serving more than two consecutive terms on a cooperative’s board of directors. However, the new bill proposes a modification, stating that no person can serve more than two consecutive terms in the same position.
The bill also amends the provision regarding the recommendation committee for appointing the chairman and members of the Cooperative Regulatory Authority. Previously, the ordinance required a former governor to be part of the recommendation committee, but the new bill replaces this requirement with a former finance secretary.
Although the government established the Cooperative Regulatory Authority in late January, it has yet to appoint a chairman or expert members. Ministry sources attribute the delay to the failure to implement the provision requiring a former governor in the recommendation committee, prompting its removal.
The government had introduced the ordinance to address growing problems in savings and credit cooperatives, including risks to depositors' funds. The amendment had also included the formation of a credit information center and a savings and credit guarantee fund. However, even after two months, authorities have made no concrete progress in resolving the issues, leaving depositors uncertain about the recovery of their savings.
