KATHMANDU, Jan 23: The Department of Cooperative (DoC) has directed cooperative organizations to close their branches if they are operating more than one branch across the country.
Issuing a six-point directive, the DoC has asked the cooperatives to shut their branches. Since cooperatives are meant to serve members in their community it is not necessary for them to cover a lot of geographical or working areas, according to an official at the DoC.
DoC sets a number of conditions for cooperatives seeking to mer...
Despite the government rules, many saving and credit cooperatives in particular have been operating number of service centers in the name of expanding services to their members.Two years ago, the cabinet decided to suspend the registration, service expansion and permission of service centers related to cooperatives, particularly to those meant for saving and credit services.
Through their service centers, cooperatives are found to be accepting huge deposits and investing in high-risk sectors. The cooperative sector is grappling with a financial crisis as members and depositors are facing challenges in retrieving their savings.
In the new rule enforced by the DoC, the cooperatives are allowed to make only natural persons as their members. “The cooperatives cannot make any business entity or the organisation as their members.”
Likewise, a cooperative cannot lend more than 10 percent of their share capital to a single borrower. The cooperatives have been barred from trading of real estates.
They are permitted to provide loans to purchase land with an area of only up to 1,000 square meters. They have been given a ceiling to maintain a credit to deposit ratio of up to 90 percent, while they cannot inject more than 25 percent of their loan portfolio on a single type of investment.
