YADAV HUMAGAIN

KATHMANDU, August 13

The government has proposed the formation of 'Financial Cooperative Regulation and Supervision Authority’, a new regulatory body to oversee the savings and credit cooperatives.

The Ministry of Land Management, Cooperatives, and Poverty Alleviation is preparing the draft of the 'Financial Cooperatives (Regulation and Supervision) Act, 2081,' which includes plans for this new authority.

According to the draft, the authority will be responsible for licensing, regulating and supervising the cooperatives.

It will have the power to set minimum capital requirements, issue licences, classify cooperatives, and oversee their operations to ensure compliance and proper functioning.

The proposal is in line with the current fiscal year’s budget plan, which outlines the establishment of a dedicated regulator for financial cooperatives.

A ministry official, asking not to be named, confirmed to New Business Age that the draft includes provisions for the formation of this new regulatory body.

“We have drafted the law with provisions for monitoring financial cooperatives through the authority,” the official said.

According to the draft, the proposed authority will be a self-governing and organised body with distinct legal recognition. It will be responsible for the effective supervision, regulation, operation, management, inspection, and monitoring of financial cooperative organisations.

 It will be led by a seven-member board, with the chairman, serving as the executive head, appointed by the government.

Other members would include the executive director of Nepal Rastra Bank; two joint secretaries, each from the Ministry of Land Management, Cooperatives, and Poverty Alleviation and the Ministry of Finance; the registrar of the cooperative department; and two members nominated by the government including at least one woman.

The draft bill also specifies that cooperatives with a turnover over Rs 500 million, capital exceeding Rs 150 million, and personal savings greater than Rs 1 million must obtain a licence from the authority.

Even the existing cooperatives are required to obtain the licences within one year of the act's enactment.

Similarly, it also states that the authority will periodically determine the minimum share capital which the cooperatives would have to maintain within the set deadline.

Additionally, the authority will classify the cooperatives into A, B and C categories based on their share capital, nature of business and scope of work.

The bill will also specify the permissible activities for each category.