Cooperatives in Nepal

Nepal has a long-standing history of informal community based cooperatives. The first formal credit cooperative in Nepal was started in 1954 by the Government of Nepal as a pilot project. The first Cooperative Act was promulgated by the monarchy in 1960, followed by the Agricultural Cooperative Act (Sajha Sahakari). In 1962 amendments were made to the Cooperative Act to improve the cooperatives' operations. The capital of savings and credit cooperative societies was converted into a Cooperative Bank in 1963, and in 1968 it was converted into the Agricultural Development Bank of Nepal (ADBN). After 5 years the ADBN returned management back to the monarchy and in 1975 the Cooperative Act was amended again.

Beginning in the 1980's a new generation of community based savings and credit groups began to emerge in Nepal. In 1985, the Cooperative Act was amended for the third time to give the Government more control. By this time the Savings and Credit movement had spread throughout the country and the need for an apex coordinating body was evident. In August 16, 1988, the National Federation of Savings and Credit Groups (NAFSCUN) was formed. This name was subsequently changed to the National Federation of Savings & Credit Unions (NEFSCUN).


      Provisions in Cooperative Act 1991
The Cooperative Act of 1991 permitted the establishment of a three-tier system:
The primary society level cooperative organization shall be formed by a minimum twenty-five like-minded community people with the approval of the Department of Cooperatives.
The District Union is the second tier federation of primary cooperatives. According to the Cooperative Act, five or more single purpose primary cooperatives of the same district shall form one district union with the approval of the District Cooperative Office/ Department of Co-operatives.
The Central Federation is the national organization for single purpose cooperatives. The 25 registered primary societies or 5 district unions shall form central federation.