NCBL sets up Rs 2 billion cash management fund to help co-ops facing cash shortage – myRepublica

KATHMANDU, 27th December: The National Cooperative Bank Limited (NCBL) has set up a cash management fund worth Rs 2 billion citing to help cooperatives facing the problem of shortage of cash.

KB Upreti, president of the NCBL, said he had approved a working directive to use the money from the fund to avoid a possible shortage of loanable funds in cooperatives. “Using the fund, we will provide unsecured loans of up to Rs 10 million to cooperatives that need money to lend in productive enterprises,” Upreti said.

Currently, banks and financial institutions (BFIs) in Nepal are facing liquidity crunch due to excess lending against low deposit collection. As a result, almost all banks broke through the 90% credit-to-deposit ratio (CD) limit.

In recent weeks, co-ops have also started to face a problem of shortage of cash to provide loans. According to Minraj Kandel, chairman of the National Cooperative Federation of Nepal, the demand for loans in cooperatives has increased significantly after CIBs were unable to provide adequate amounts of loans to their clients.

Cooperatives in Nepal have mobilized around Rs 500 billion in deposits from their members. However, there is no strict mandatory framework to track cooperative enterprise deposit lending like that imposed on IBFs.

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