Kathmandu, Dec. 7
The Ministry of Land Management, Cooperatives and Poverty
Alleviation of Bagmati Province has issued a new regulation on Wednesday to
check cooperative organisations from issuing loans without collateral.
In its Operation, Monitoring and Auditing of Cooperative Organisations
Standards 2022, the provincial ministry said that the cooperatives have been
investing in the risky areas like real estate and they lacked proper financial
management. According to it, the standards have been issued to monitor and regulate
the cooperative organisations in the province in order to strengthen and
empower them.
It has a provision that an organisation must provide loans
to its members based on the available resources, risk analysis and the total
capital fund of the organisation. Likewise, it has also specified that the
organisations should only invest in loans with a reasonable guarantee or money
guarantee of a member so that the proposed loan is secured. In case of the
members who don't have any property to offer as the collateral, their savings
can be used for the same.
Similarly, the standards has set a limit of loans to be
mobilised to the real-estate sector to 25 per cent of the total loan portfolio
of each cooperative organisation. In case of a project loan, the cooperatives
are allowed to invest only 70 per cent of the total project cost and the
members have to bear the remaining 25 per cent cost.
According to the Department of Cooperatives, by December
2020, there were 29,886 cooperative organisations in Nepal. Of them, only 125
(0.41 per cent) are under the federal government, 6,003 (20.08 per cent) under
the provincial governments, and 23,759 (79.49 per cent) under the local
governments.
Published in The Rising Nepal daily on 8 December 2022.
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