The government is moving ahead with preparations to establish the National Cooperative Regulatory Authority, even though a chairperson has not yet been appointed. According to a recently introduced ordinance, the National Cooperative Development Board will be transformed into the authority.

Last Friday, the government amended the Cooperatives Act, 2074 BS, through an ordinance, creating provisions to regulate savings and credit cooperatives under the new authority. Since the appointment of the chairperson may take time, the government plans to temporarily assign the responsibility to a gazetted special category officer, said Arjun Prasad Pokharel, secretary at the Ministry of Land Management, Cooperatives, and Poverty Alleviation.

The ordinance specifies that if the chairperson's position is vacant, the government can appoint a senior government officer to act as the chairperson. “We are currently making internal preparations for forming the authority,” Pokharel stated. He added that the ministry is drafting internal work procedures, including guidelines for meetings and employee administration.

A committee will recommend candidates for the chairperson’s position, chaired by the chairperson of the Public Service Commission or a designated member. The committee will also include a former governor and an expert with at least 15 years of experience in economics, finance, law, or cooperatives. The committee will invite applications through a 15-day public notice and recommend three candidates to the government, which will appoint one of them as chairperson.

Although the committee has not yet been formed, internal preparations for its establishment are underway. In the meantime, other members of the authority, including the executive director of Nepal Rastra Bank (NRB), the ministry’s joint secretary responsible for cooperatives, and a chartered accountant, will oversee the operations of the authority.

The chairperson of the authority must hold at least a Master’s degree in economics, commerce, management, accounting, law, or cooperatives and must have served as a gazetted first class officer or its equivalent, or have at least 15 years of experience in a relevant organization. Expert members require a Master’s degree and a minimum of 10 years of experience, while a chartered accountant with at least 10 years of experience will also serve as a member.

The authority is tasked with registering, regulating, supervising, and monitoring cooperatives engaged in savings and credit activities. It can also issue standards, provide instructions, and exercise judicial powers similar to those of a district court.

The urgency to establish the authority stems from the growing number of cooperatives unable to return public savings and the weak enforcement of anti-money laundering measures. The ordinance extends the authority’s jurisdiction to provincial and local levels and categorizes savings and credit cooperatives into district, provincial, and national levels, with savings limits set at Rs 1 million, Rs 2.5 million, and Rs 5 million, respectively.

On Tuesday, NRB issued a draft of guidelines for savings and credit cooperatives. These standards propose regulations for forming boards of directors, capital funds, loan investment limits, and loan loss provisions. While NRB has the authority to draft these standards, their implementation will fall under the new regulatory authority.

Nepal currently has 34,000 registered cooperatives, over 50 percent of which are savings and credit cooperatives.