The Office of the Cooperatives Registrar (OCR) has capped the maximum reference interest rate that cooperatives can charge on loans at 13%, effective Thursday, September 17, 2026. The previous ceiling was 16%.

The OCR, under the Ministry of Land Management, Cooperatives, Federal Affairs and General Administration, said cooperatives may set lending rates below 13% based on their operational condition, requirements and justification.

The new directive also limits the spread between the interest rate paid on savings and the rate charged on loans to six percentage points.

The OCR has instructed cooperatives to comply with existing legal provisions prohibiting the capitalization of accrued interest into the principal loan amount for the purpose of charging compound interest.

If a cooperative imposes a penalty on outstanding interest, the penalty cannot exceed 5% of the outstanding interest amount. The directive also requires all loan-related costs to be incorporated into the stated interest rate. Cooperatives therefore cannot impose additional charges under headings such as administrative fees, service charges, renewal fees, form fees or similar categories.

Cooperatives must also publicly disclose the interest rates they set through their websites or other media platforms so that members can access the information.

The directive prohibits cooperatives from applying different interest rates for the same type of savings or loan based on a member's position. The rule covers ordinary members as well as board members and office bearers, audit and supervision committee members, sub-committee members, managers and employees.

For loan disbursement, cooperatives must deposit the funds directly into the borrowing member's personal account.

The OCR has further stated that cooperatives cannot impose additional debt burdens on borrowers by linking a member's loan obligation to the cooperative's liabilities beyond the amount personally incurred by the member.