Kathmandu. Nepal Rastra Bank has approved directives and standards for the regulation and supervision of cooperatives.
The National Bank on Thursday informed that the board of directors has approved the directives and standards for cooperatives engaged in savings and loans, 2081, to make the transactions of cooperatives engaged in savings and loans systematic, transparent and effective.
According to the approved standards, an organization can collect savings up to 15 times the primary capital fund, and an organization can borrow up to five percent of its total assets from banks and financial institutions and cooperative banks, the National Bank has stated.
When borrowing in this way, it will not be possible to borrow more than 100 percent of the capital fund. However, in the case of cooperatives that invest 51 percent or more in collective guarantee, the Rastra Bank has stated that they can take loans up to 20 percent of the total assets or 10 times the capital fund.
According to the area of operation of the organization, 1 million rupees have been set for one district, 25 million rupees for more than one district, and 50 million rupees for more than one province. And in the case of savings established before 2081 Poush 14, the Rastra Bank has stated that they must be completed within two years from that date.
The organization can operate ordinary, regular and periodic savings accounts for a period of up to three years. However, the regular savings portion must be maintained at a minimum of twenty-five percent of the total savings. The organization will implement the procedures for saving mobilization that it accepts after getting it approved by the general meeting.
When a member deposits a savings amount of more than 1 million rupees, it will be mandatory to disclose the source. The organization will not be allowed to provide loans to members who have not been members for at least three months. The maximum amount of loans per member will not be more than 15 percent of the primary capital.
Members who are making regular savings can be provided with loans without collateral, up to five times or more of the savings amount, whichever is less, or five hundred thousand rupees. The National Bank has stated that at least two members should be guarantors when disbursing loans without collateral.
The organization can disburse a maximum of 90 percent of the loan against the security of the member’s savings. When disbursing loans against the collateral of immovable property, it can disburse a maximum of 60 percent of the collateral valuation in metropolitan cities and a maximum of 70 percent in the case of collateral in municipal and rural municipalities.
The National Bank has stated that loans should be disbursed only against the collateral of the borrower member himself or his immediate family. A loan loss provision should be made based on the outstanding amount for the loan. According to which, there are 1 percent good, 25 percent bad, 50 percent doubtful, and 100 percent bad.
If any installment exceeds the due date, the entire outstanding loan amount will have to be classified based on the period during which the installment amount exceeded the due date and a loan loss provision will have to be established.
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