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Reference interest rate in offing for cooperatives

KATHMANDU: The Department of Cooperatives (DoC) is all set to implement the reference interest rate for the cooperatives.
Dr. Tok Raj Pandey, Registrar of the DoC, said on Tuesday that the DoC would implement the interest rates at any cost. “Feelings and emotions do not deter us from practicing the interest rate. The reference rate will be announced soon,” he said while speaking at a discussion programme on ‘Setting reference interest rates for cooperatives’ organised by the Nepal Society of Cooperative Journalists.
According to him, the department is having discussion with the stakeholders about the reference interest rate and it will be implemented anytime in the near future.
“No pressure would stop us from the responsibility of setting the rate as per the Cooperatives Act, 2074,” he said. Although the reference interest rate was mentioned in the Cooperatives Act 2074, it is yet to be decided.
The practice of the reference rate will increase the contribution of the cooperatives to the financial sector and support in entrepreneurship development. He said that despite complexity of the issue, the department was near to finalising the number.
Keshab Prasad Badal, president of National Cooperative Federation (NCF) of Nepal, said that the interest rate of the cooperatives should not be above 16.5 per cent.
He advocated for high interest rates and said that below 16.5 per cent interest rate would create challenges in the part of cooperatives.
“Setting reference interest rates for cooperatives has become essential but it must not go below that level. The NCF had recommended 17.5 per cent interest,” he said. However, he maintained that the cooperatives must not go haywire from their principle, they must focus on quality services.
This is not something imposed on us by the government, it is a necessary thing for the cooperatives campaign, said Badal. He suggested that the cooperatives that cannot run healthily should go for a merger.
He warned the cooperatives aspiring to go for a banking system and said that they should stick to the cooperatives principles. “They don’t have right to deviate from the principles and norms,” he said.
Director of the Nepal Rastra Bank Narendra Bista said that since the cooperative were mobilising loan at lower interest rates, it could be brought down. “But it would not be scientific to bring down the rate from 24-25 per cent to 12-13 per cent,” he said.
He said that leaving the interest rate to the free market had created challenges even in the banking sector.

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