The government has once again proposed a limit of Rs 2.5 million on individual savings in cooperative organizations, citing the growing risks associated with large deposits made to secure higher interest rates.

Two years ago, a similar provision was included in a bill aimed at amending laws related to money laundering prevention and improving the business environment. However, the provision was removed after opposition from cooperative stakeholders. The government now plans to reintroduce the limit through an amendment to the Cooperative Act via an ordinance.

The proposal comes amid concerns over the rising number of cooperatives unable to return public deposits due to weak regulation. The ordinance, prepared by the Ministry of Land Management and Cooperatives, also includes the formation of a Cooperative Regulatory Commission, a Credit Information Center, a Debt Recovery Tribunal, and a Savings and Credit Protection Fund to strengthen oversight of savings and credit cooperatives.

A Parliamentary Investigation Committee on the Misuse of Cooperative Savings, led by MP Surya Thapa, had previously recommended imposing savings limits and forming regulatory mechanisms to oversee cooperatives. Government sources confirmed that these recommendations have been incorporated into the new ordinance.

Earlier, the Nepal Rastra Bank Act, 2058 BS, and Cooperative Act, 2074 BS, were amended to give Nepal Rastra Bank (NRB) the authority to regulate cooperatives with assets or transactions exceeding Rs 500 million. However, the NRB has not yet enforced these provisions effectively.

According to Secretary Arjun Prasad Pokharel, discussions are ongoing with relevant stakeholders to finalize the ordinance. The draft amendment proposes a five-year grace period for individuals to reduce their savings within the Rs 2.5 million limit if their deposits exceed this amount prior to the law’s enactment.