The Nepal Rastra Bank (NRB) has introduced new directives and guidelines to enforce stricter regulation on savings and credit cooperatives. Under the new provisions, cooperatives engaged in savings and loan transactions can borrow only up to 5% of their total assets from banks, financial institutions, or cooperative banks.
Furthermore, the cooperatives are prohibited from taking loans that exceed their capital fund. The guidelines also set a cap on the amount of savings a cooperative can collect from an individual member. If the cooperative operates within a single district, the savings limit per member is Rs 1 million; for cooperatives operating in more than one district, the limit is Rs 2.5 million; and for those operating across more than one province, the ceiling is set at Rs 5 million.
For savings already in place before December 29, 2024, cooperatives must ensure compliance with these limits within two years from that date. If a member deposits more than Rs 1 million, the source of funds must be disclosed mandatorily.
The guidelines also aim to curb reckless lending. Members who have not completed at least three months of membership cannot receive loans. A cooperative may only lend up to 15% of its core capital to any single member.
Regarding collateral-free loans, cooperatives may lend up to five times a member’s savings, or Rs 500,000—whichever is lower. At least two guarantors are required for such loans. Moreover, board members are barred from taking loans from the cooperative.
Except for specialised institutions, cooperatives with large transactions must direct at least 50% of their total loan portfolio towards productive sectors, such as agriculture, industry, and business operation or expansion. They are given until July 15, 2026 to meet this requirement.
Similarly, cooperatives can lend up to a maximum of 90% of the amount saved by members, ensuring savings security. Loans disbursed against project security may cover up to 80% of the total project cost, provided they are issued in instalments.
Loans disbursed by cooperatives must also be categorised based on repayment and interest payment timelines. Loans that are current (i.e. not overdue or overdue by less than three months), including those secured by members’ savings, are considered good loans.
Loans overdue by 3 to 6 months fall under 'substandard'; those overdue by 6 to 12 months are 'doubtful'; and loans overdue for more than 12 months are classified as 'bad'.
A senior NRB official stated that these guidelines have been issued to effectively implement the provisions introduced by the government during the amendment of certain cooperative-related laws in December 2024.
