Nepal’s Cooperatives Sector in Crisis

Nepal’s cooperatives sector is in disarray, with thousands of depositors unable to withdraw their savings from troubled cooperatives. Despite the government’s efforts to address the issue, the problem persists, with many cooperatives failing to refund depositors’ money.

According to the Kathmandu Metropolitan City, 187 cooperatives within the city limits have failed to refund deposits worth over Rs 8 billion to thousands of depositors. Similarly, the Sahakari Bachatkartha Sanrakshan Rashtriya Abhiyan Mahasangh, a national federation of cooperatives, has reported that over 600 cooperatives are facing problems, with more than 500 of them being declared troubled.

Government’s Response

The government, led by Prime Minister Balendra Shah, has been criticized for its slow response to the crisis. The National Cooperatives Federation has been without a leadership since the government took office, and the newly established Cooperatives Regulatory Authority is also without a head. As a result, the refund process has been slow, and many depositors are still waiting to get their money back.

The government has declared 23 cooperatives as troubled, but many more are facing problems. The Cooperatives Regulatory Authority has received over 800 complaints against cooperatives, but many of them are still pending.

Causes of the Crisis

Experts say that the crisis in the cooperatives sector is due to a lack of effective regulation and supervision. Many cooperatives have been involved in irregularities, such as investing depositors’ money in real estate and the stock market, and using it for personal gain. Some cooperatives have also been found to have fake accounts and fictitious transactions.

The lack of internal control and the dominance of a single family or group in the management of cooperatives have also contributed to the crisis. In some cases, cooperatives have been used as a means of money laundering and other illicit activities.

Way Forward

To address the crisis, the government needs to take immediate action to strengthen the regulatory framework and ensure that cooperatives are operating within the law. The Cooperatives Regulatory Authority needs to be empowered to take action against errant cooperatives, and the government needs to provide support to depositors who have lost their money.

Experts also suggest that the government needs to promote transparency and accountability in the cooperatives sector, and ensure that cooperatives are operating in a fair and transparent manner. This can be achieved by implementing strict regulations and supervisory mechanisms, and by promoting a culture of transparency and accountability within the sector.