Cooperative Regulation
14th October 2025, Kathmandu
The National Cooperative Regulation Authority (NCRA) has introduced stringent new measures to enforce accountability and order in the cooperative sector.
Cooperative Regulation
Effective immediately, the authority has mandated mandatory registration for all Savings and Credit Cooperative Societies (SACCOS).
This pivotal step in Cooperative Regulation prohibits any savings and credit cooperative from conducting financial transactions without proper and formal registration.
Cooperatives must comply with legal processes to obtain authorization and secure annual renewal. This new framework addresses long-standing risks stemming from unregulated operations and aims to enhance overall Financial Transparency.
Strict Penalties for Non-Compliance
The NCRA’s new standards include stiff penalties for non-compliant organizations. Any cooperative society found conducting economic activities without the required mandatory registration will face severe repercussions.
Penalties include hefty fines reaching up to Rs. 1.5 million. Furthermore, the Authority reserves the right to cancel the registration of such institutions entirely.
These aggressive measures signal a clear intent from the regulatory body to put an end to informal and high-risk financial operations.
By setting high fines, the Authority ensures the deterrence of unauthorized cooperative activities, safeguarding member investments and promoting financial discipline across the sector.
Addressing Historical Regulatory Gaps
Previously, a significant number of cooperative societies operated in a regulatory gray area. They collected deposits and issued loans without formal registration, leading to a palpable lack of oversight.
This laxity created systemic risks, contributing to instances of mismanagement and financial instability within the cooperative sphere.
The new Cooperative Regulation framework comprehensively closes these loopholes. By requiring legal authorization and enforcing annual renewal, the NCRA creates an environment of continuous scrutiny.
This structural reform ensures that all SACCOS are brought under a unified monitoring system.
Enhancing Financial Transparency and Accountability
The core objective of the NCRA’s directive is to instill greater Financial Transparency and accountability among cooperatives.
Formal registration requires institutions to adhere to standardized reporting and operational procedures. Furthermore, the new standards clearly define and impose annual renewal fees based on the cooperative society’s capital base.
This capital-based fee structure not only generates revenue for improved regulatory functions but also categorizes cooperatives by size.
This differentiation allows the NCRA to implement risk-based supervision, focusing greater resources on larger institutions. Regular renewals tied to compliance are essential for maintaining a clear, updated registry of operational cooperatives.
The Impact on Digital Finance Adoption
Increased Cooperative Regulation often lays the groundwork for better adoption of financial technology (FinTech). Once formally registered and standardized, cooperatives can more easily integrate with national payment systems and digital platforms.
The requirement for mandatory registration compels cooperatives to modernize their operations, including utilizing digital record-keeping and transaction systems.
This technological shift is crucial for improving the efficiency and security of financial services provided by SACCOS across the country, aligning the sector with the national goal of a digital economy.
This step reinforces the protection of depositors and streamlines the entire cooperative ecosystem, creating a more professional and trustworthy environment.
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