KATHMANDU: Cooperative Journalists Society Nepal (CJN) organised a discussion programme on the topic ‘Reference interest rate’ on Wednesday.
A discussion was held between cooperative campaigners and the regulatory Department of cooperatives.
Speaking on the occasion, Om Devi Malla, Senior Vice President of National Cooperative Federation of Nepal (NCF), said that the cooperatives provided loans exceeding the reference interest rate limit.
She argued that the department did not regulate effectively. She expressed her dissatisfaction that the Cooperative Act had not been amended for a long time and opined that the government has become indifferent to the strengthening of the cooperative sector.
She said that many cooperatives have problems since their members have not paid their loans.
Tola Raj Upadhyaya, Deputy-Registrar at the Department of Cooperatives, warned that cooperatives that voluntarily increase interest rates will be punished immediately. He said that as the department is working within the provisions of the Act, it is not in a position to increase the reference interest rate.
The interest rate determination committee has formed a sub-committee to study,” he said, “There is no way to increase the interest rate more than 16%.”
He opined that the state should be run in the interests of all, however, the weaker sections should be prioritised. He was of the view there will be no objection to making the reference interest rate 20% if doing so benefits the weaker sections. Deputy-Registrar Upadhyaya said the department intends to reduce the number of cooperatives.
Paritosh Paudyal, Chairman of Nepal Federation of Savings and Credit Cooperative Unions (NEFSCUN) opined that there is no condition to increase the interest rate according to the law. However, he said the process has been moved ahead to increase the interest rate.
He opined that the interest rate of cooperatives should be timely and automatic. “There is no possibility of immediate revision of the interest rate. If we do not take legal action, the cap of 16% may be violated. According to the current regulations, there is no situation to go above 16%,” he said.
Gyan Bahadur Tamang, President of Kathmandu District Cooperative Association and Director of National Cooperative Bank, said cooperatives have been facing problems as debtors have not paid loans.
“Now many members are filing lawsuits in the court with the intention of not paying the loan. If this is not stopped, the situation will be worse.” he said, “There is a problem because there is no clear policy on what to do with the members who do not pay the loan.” He opined that while the banks are offering 17% interest, the cooperatives should now give up to 20% interest.
The discussion held under the chairmanship of Tulsi Subedi was conducted by CJN Secretary Arjun Khatiwada. Dozens of journalists also raised their questions about reference interest rates in the programme.
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