Call not to enforce central bank directives and standards in cooperatives sector

By Krishna Sapkota, Kathmandu, Jan 28: Stakeholders have raised voice that the Nepal Rastra Bank, the central bank should not enforce its directives and standards to the cooperatives sector when the National Cooperative Regulation Authority has been already constituted.     

At a discussion programme hosted by Nepal Society of Cooperative Journalists (CJN) here today on 'Cooperative ordinance, directive and standards', the speakers stressed the need for the Authority to take up the responsibility of cooperatives' regulation.     

Stakeholders argued that the Rastra Bank should not enforce the directives and standards for cooperatives as the Authority has already been formed.     

Chairperson of the National Cooperatives Federation, Om Devi Malla said that the Authority itself can formulate the directives and standards to regulate the cooperatives sector. "After the establishment of the Authority to regulate cooperatives, it should come up with instructions and standards. We have been demanding the establishment of Credit Information Centre but it has not been addressed. The government is only trying to tighten the cooperatives".     

Although the government-introduced ordinance has some positive provisions as well, the provision of savings limit has breached citizens' freedom, she added. "The Credit Information Center should come before the Authority in place to manage the cooperatives", Malla noted.     

Chairperson of Nepal Federation of Savings and Credit Unions (NEFSCUN) Chandra Prasad Dhakal stressed that the directives and standards should not be enforced for cooperatives. "All necessary directives and standards should now be prepared by the Authority as it has a representation of the Executive Director of the Rastra Bank".     

He argued that the central bank should not enter into the cooperatives sector, instead provide technical assistance.     

The laws related to cooperatives are good, but the sector has been grappling with challenges due to lack of implementation, he said. However, he complained that the ordinance did not include the provision of returning savings amount to the depositors.     

He demanded that a calendar should be prepared to implement the provisions of the ordinance. "There is no problem in the loan recovery process. A calendar is needed to execute the process".     

Similarly, Chairperson of Bagmati Province Savings and Credit Federation Uddhav Sapkota alleged that the directives and standards were made to serve the interest of the banks.     

Sapkota said that the directives and standards of the Rastra Bank will invite problems to the cooperative sector while the banks will benefit. Sapkota claimed that the issue of saving limit and tenure of the director is also not practical.     

Secretary at the Ministry of Cooperatives and Chair of the National Cooperative Regulatory Authority Arjun Prasad Pokharel said that the government has made some stringent provisions to amend the ordinance keeping in mind the overall issue of cooperatives.     

He clarified if some provisions are required to be amended, it should go through the process of amendment to the bill. He, however, said that the provision could not be removed and fully amended. "The government has to take stern steps after diagnosing the problems in cooperatives. Both the depositors and lenders of the cooperatives should be secured".     

The cooperative sector should be made credible as the financial institution is run by trust, he asserted.     

The participants of the programme demanded immediate amendment to some of the provisions of the ordinance, terming them impractical. They said it was wrong to set savings limits on the basis of scope.     

The participants stressed the need to abolish the limit on cooperative savings. CJN Chair Kaji Shrestha presided over the programme.(RSS)