Over 11,000 Cooperatives Under Registration as Nepal Tightens Oversight of Savings Sector

Nepal’s cooperative sector is entering a new phase of regulatory restructuring, with more than 11,600 cooperatives currently undergoing registration procedures under the National Cooperative Regulatory Authority. The move comes as the government intensifies efforts to restore credibility in the cooperative system following a series of financial irregularities and growing public concern over the safety of depositors’ savings.

The authority has launched a nationwide registration and licensing process targeting cooperatives primarily engaged in savings and credit transactions. Officials say the objective is to bring the sector under a more structured, transparent, and accountable regulatory framework after years of weak supervision and fragmented oversight.

According to the authority, around 3,000 cooperatives have already received operating licences after completing the required verification process. However, nearly 8,000 other institutions are still under review, with officials examining submitted documents, verifying operational details, and checking compliance with regulatory standards before granting final approval.

Authorities say a significant number of cooperatives have failed to submit complete documentation. Among the institutions seeking licences, around 3,646 cooperatives have reportedly provided incomplete records or insufficient paperwork. Their applications remain pending until the required details are corrected and verified.

The government established the National Cooperative Regulatory Authority about a year ago after repeated cases of financial mismanagement, fund misuse, and depositor crises exposed deep weaknesses in Nepal’s cooperative monitoring system. In recent years, several cooperatives across the country collapsed or faced allegations of embezzlement, leaving thousands of depositors unable to recover their savings.

Chairperson of the authority, Dr. Khag Raj Sharma, said the institution has already begun creating an official record system for cooperatives operating under federal, provincial, and local jurisdictions. According to him, the registration drive is intended not only to identify active cooperatives, but also to establish a unified monitoring mechanism capable of tracking their financial condition and operational activities.

Executive Director Keshav Raj Bhattarai stated that all cooperatives involved mainly in savings and credit activities will now be required to obtain licences from the authority before continuing business operations. This provision is expected to create stricter entry barriers and reduce the risk of unregulated financial practices within the sector.

Policy analysts say the licensing requirement could significantly reshape Nepal’s cooperative landscape. For years, many cooperatives operated with limited financial disclosure, weak auditing standards, and minimal regulatory intervention. In several cases, institutions expanded aggressively by collecting deposits without maintaining adequate governance or liquidity safeguards.

The latest initiative is therefore being viewed as an attempt to separate financially healthy institutions from those operating without proper accountability. Experts believe stronger regulatory oversight could gradually help restore public confidence, particularly after repeated scandals severely damaged the reputation of the cooperative sector.

To strengthen supervision and financial monitoring, the authority has also signed a memorandum of understanding with the Institute of Chartered Accountants of Nepal. Under the agreement, the institute will assist in reviewing cooperative transactions and assessing their financial health. Officials say professional auditing and independent financial analysis will play an important role in improving transparency and identifying risks at an early stage.

Economists argue that the cooperative sector remains deeply important to Nepal’s rural and semi-urban economy, especially for low-income households and small entrepreneurs who often rely on cooperatives for savings and access to credit. However, they caution that without proper regulation, the sector can also become vulnerable to financial misconduct and liquidity crises.

The ongoing registration campaign is therefore being seen as both a corrective and preventive measure. While the process may initially create administrative pressure for thousands of cooperatives, regulators believe it is necessary to establish minimum governance standards and protect depositors from future financial uncertainty.

Observers say the real challenge now lies in implementation. Nepal has previously introduced regulatory reforms in the financial sector, but weak enforcement and political influence often limited their effectiveness. If the authority can maintain independent oversight, ensure transparent licensing, and regularly monitor financial performance, analysts believe the reform could become a turning point for Nepal’s troubled cooperative system.

At the same time, some cooperative operators are concerned that smaller institutions in remote areas may struggle to meet the new compliance requirements due to limited technical and administrative capacity. Regulators, however, insist that stronger accountability mechanisms are essential to rebuild trust and stabilise the sector in the long run.