Cap on credit interest of cooperatives come into effect

KATHMANDU: The government’s earlier decision to cap the interest rate on loans being disbursed by the cooperatives at 14.75 percent has come into effect from Saturday.

The Reference Interest Rate Determination and Recommendation Committee on September 20 had decided that cooperatives will not be allowed to charge more than 14.75 percent interest on any type of loans that they provide effective from October 31.

Stating that the cooperatives had been charging exorbitant interest ratesa s per their will, the committee in July had dropped the reference interest rate from 19 percent to 16 percent, which has been further revised downward.

Similarly, the cooperatives now cannot provide more than 8.75 percent interest on savings deposits. There is a provision that the difference between the credit interest and savings interest must be lower than six percent. Due to this provision, the cooperatives cannot provide higher rates on savings now.