Cooperative Credit Information Center Procedure Ready
July 19, 2020 | Investopaper
Procedure has been prepared for the establishment of credit information center of cooperatives. The Ministry of Land Management, Cooperatives and Poverty Alleviation is preparing to approve the procedure. National Cooperative Federation has already drafted the working procedure and submitted suggestions to the Ministry. The Ministry will pass the working procedure on the basis of the suggestions as required.
Bad loans are increasing in cooperatives due to lack of credit information center. The need for credit information centers in cooperatives is increasing as the tendency of bad-intentioned members to take loans from one cooperative and repay to another.
A credit information center is being set up to remove such provision and to implement the provision of blacklisting the defaulters. Even though the provision of credit information center has been placed in the Cooperatives Act 2074 BS and Rules 075 BS, the procedure has not come yet.
Cooperatives have to invest a minimum paid up share capital of Rs. 50 million to operate a credit information center. There is a provision that more than 25 primary cooperatives must participate and deposit at least 60 percent of the amount. Provision has been made in the rules for the government bodies including the central association of 40 percent financial cooperatives to hold shares. The Ministry has to approve the basis of establishment of credit information center, membership / capital structure, organizational structure and other arrangements.
There is an arrangement for the member secretary of the National Cooperative Development Board, joint secretary of the Ministry of Finance, joint secretary of the Ministry of Cooperatives, director of Nepal Rastra Bank and registrar of the Department of Cooperatives to operate the credit information center.
The person who does not repay the loan of the cooperative will be blacklisted through the credit information center. The government is planning to reduce the bad debts from the cooperatives along with banks and financial institutions by exchanging information between the credit information center of the cooperatives and banks.
