The Department of Coope-ratives has been thinking of ordering cooperatives to fix a maximum spread rate of 5 percent in line with Nepal Rastra Bank ’s (NRB) directive to commercial banks.
Cooperatives have been maintaining a 6 percent spread rate since mid-April 2011. The spread rate is the difference between the interest rate charged to borrowers and the interest rate offered to depositors. “We are planning to revise the spread rate ,” said Kedar Neupane, registrar at the department. “Coopera-tives, which are offering interest rates beyond their capacity, are facing problems.”
Though there is a provision of maintaining a spread rate , there isn’t any effective monitoring of the provision. Such details are scrutinized only when cooperatives submit their reports. The department has been asking cooperatives having a spread rate beyond the set limit to reduce it time to time. According to Neupane, cooperatives failing to abide by the provision are being scrutinized and that the provision is being implemented gradually. The department, however, does not have an average spread rate of the cooperatives . Similarly, there is no data of the interest rates of cooperatives .
NRB has fixed a maximum spread rate of 5 percent for banks and financial institutions.The operating cost and income through interest of banks and financial institutions is higher compared to cooperatives . NRB has made it mandatory for commercial banks to bring down their spread rate s within 5 percent by the current fiscal year. The central bank has also indicated that the rate might be reduced further. Since cooperatives are understaffed and the cost of operation is lower compared to banks and financial institutions (BFIs), they still have a chance to earn good profits. Like banks, the department has also directed cooperatives not to have a difference of over 3 percent interest on similar types of savings accounts and loans.
source:the kathmandu post,14 march 2014
LINK
Cooperatives have been maintaining a 6 percent spread rate since mid-April 2011. The spread rate is the difference between the interest rate charged to borrowers and the interest rate offered to depositors. “We are planning to revise the spread rate ,” said Kedar Neupane, registrar at the department. “Coopera-tives, which are offering interest rates beyond their capacity, are facing problems.”
Though there is a provision of maintaining a spread rate , there isn’t any effective monitoring of the provision. Such details are scrutinized only when cooperatives submit their reports. The department has been asking cooperatives having a spread rate beyond the set limit to reduce it time to time. According to Neupane, cooperatives failing to abide by the provision are being scrutinized and that the provision is being implemented gradually. The department, however, does not have an average spread rate of the cooperatives . Similarly, there is no data of the interest rates of cooperatives .
NRB has fixed a maximum spread rate of 5 percent for banks and financial institutions.The operating cost and income through interest of banks and financial institutions is higher compared to cooperatives . NRB has made it mandatory for commercial banks to bring down their spread rate s within 5 percent by the current fiscal year. The central bank has also indicated that the rate might be reduced further. Since cooperatives are understaffed and the cost of operation is lower compared to banks and financial institutions (BFIs), they still have a chance to earn good profits. Like banks, the department has also directed cooperatives not to have a difference of over 3 percent interest on similar types of savings accounts and loans.
source:the kathmandu post,14 march 2014
LINK
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