In the first six months through mid-January, only 97 cooperatives were registered at the Kathmandu Division Cooperative Office (KDCO) as against 291 in the same period last fiscal year.[break]
The drop was recorded following amendment in the guideline which requires at least 80 percent of the members of a cooperative to be permanent residents of a single village development committee (VDC) or subdivision of a municipality called the ward.
As a cooperative can only be formed by a minimum of 25 people, the new provision, which was introduced last April, makes it mandatory for every cooperative to rope in at least 20 permanent residents of a single VDC or ward.
In case cooperatives want to expand their presence in other areas, they need to add 25 members each from every VDC or ward they set their foot in. And of the new members, at least 80 percent should be permanent residents of that area.
Before the new provision was introduced, the cooperatives were free to gather the minimum of 25 members from up to five VDCs or wards.
Many people who are against the new policy want the government to revert back to the old provision. To create pressure, they have even filed a case against the Department of Cooperatives at the Supreme Court claiming that the new guideline does not uphold the spirit of the Cooperatives Act.
But the government has argued the new provision was introduced to curb the opening of new cooperatives, which were growing beyond the expected limit making it difficult to regulate them.
Currently, Kathmandu district alone has around 4,000 cooperatives. This means there is one cooperative for every 435 residents of the district which has a population of 1.74 million.
Of the total number of cooperatives registered in Kathmandu, more than 80 percent are registered as savings and credit cooperatives, which conduct works of financial institutions but at a smaller scale.
However, figures of this year buck the trend, as most of the new cooperatives registered are working in agricultural sector, mostly in organic farming.
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