Nepal Government to Bring Cooperatives and Microfinance Under Central Bank Oversight

Kathmandu. The government has announced that the cooperative and microfinance sectors will now be placed under the direct supervision of the Nepal Rastra Bank. Through a newly released national commitment paper, the government has introduced a policy to bring the non-banking financial sector under the powerful supervisory framework of the central bank.

According to the commitment paper, all cooperatives and microfinance institutions will now be mandatorily linked to the Credit Information Bureau. This arrangement aims to ensure that loans are disbursed only after verifying the actual repayment capacity of the borrower. The government plans to focus future lending on productive sectors, collateral-free group guarantees, and local skill-based entrepreneurship.

The roles of the three tiers of government in managing the cooperative sector have also been clarified. Accordingly, the federal government will formulate regulations and standards for cooperatives, while provincial and local levels will be responsible for registration, record-keeping, and ensuring effective governance systems.

Integrated Savings Protection Fund to Refund Depositors

To address the recent severe crisis in the cooperative sector and the plight of depositors, the government has made a significant decision to establish an Integrated Savings Protection Fund. Through this fund, arrangements will be made to prioritize the repayment of savings to depositors of cooperatives declared as crisis-ridden.

Additionally, to modernize the cooperative sector, registration, reporting, monitoring, and information systems will be fully digitized. The goal is to brand and certify the quality of cooperative products, reach national and international markets through e-commerce, and create employment opportunities for youth, women, and marginalized communities.

Usury Defined as Economic Crime

The government has adopted a policy to define usury and unfair transactions as 'economic crimes' and take strict action against those involved. The commitment paper states that all past promissory notes and legal bonds will be subject to judicial investigation.

Furthermore, the government has announced that free legal aid and psychosocial counseling will be provided at the local level to support victims who have become homeless or suffered mental and physical torture due to usury and microfinance practices.