President of Nepal Ramchandra Paudel issued the Cooperatives Ordinance on Sunday. The President issued the ordinance as per Article 114 (1) of the constitution on the recommendation of the Council of Ministers. Now, all the depositors will have to disclose the source of the money if they are to save more than a million rupees in a cooperative.

The new law prohibits members or borrowers from becoming members of more than one cooperative. However, this ordinance also makes it mandatory for a person who is a member of more than one cooperative organisation of the same nature at the time of its commencement to maintain membership in only one organisation.

The ordinance also classifies cooperatives at the federal, provincial and local levels and makes provisions for issuing loans accordingly, while the term of directors has also been reduced to two years. With the ordinance in force, cooperatives that primarily engage in savings and credits will now have to protect savings by becoming members of the Deposit and Credit Protection Fund. The ordinance amends some clauses of the Cooperative Act 2017, the Rastra Bank Act-2002, and the Deposit and Credit Guarantee Fund Act-2016, which has been revised. The ordinance will have to be endorsed during the winter session of Parliament to become an Act.

The ordinance establishes a National Cooperative Regulatory Authority to regulate savings and credit cooperatives, abolishes the National Cooperative Development Board Act 1992, and mandates the return of up to Rs500,000 in depositor savings as a priority. According to the new provisions, cooperatives can lease or sell assets to obtain funds for deposit repayments to protect depositors while promoting accountability in the cooperatives sector.