Kathmandu, September 17
The maximum interest rate that cooperative institutions can charge on loans to their members has been reduced to 13 per cent, effective Wednesday.
The Office of the Cooperative Registrar revised the reference interest rate based on the recommendation of a committee formed under Section 51 of the Cooperatives Act, 2017. The maximum lending rate was previously capped at 16 per cent.
Under the new provision, cooperatives cannot charge more than 13 per cent interest on loans. However, they may set a lower rate after assessing their financial condition, needs and justification.
The difference between the interest rate offered on savings and the rate charged on loans has also been capped at six percentage points.
The office has directed cooperatives to comply with the legal provision prohibiting them from capitalising interest accrued on loans into the principal and charging further interest on the capitalised amount.
If a cooperative imposes a penalty, it cannot charge more than five per cent of the outstanding interest amount.
The office also said all costs associated with loans must be included in the interest rate, barring cooperatives from charging additional amounts under administrative, service, renewal, application or similar fees.
Cooperatives must publicly disclose their interest rates through their websites or other means. They are also prohibited from discriminating among members, directors, committee members, managers and employees when setting rates for similar savings or loan products.
—RSS
