Officials at the Ministry of Cooperatives and Poverty Alleviation (MoCPA) said that they have already prepared working procedure to govern such funds and forwarded it to the cabinet for approval."The announcement came in the government's policy and program for Fiscal Year 2015/16. However, we had already sent draft of the guidelines to set up such funds to the cabinet last year. Now that the program has been announced, we expect the working procedures to be approved soon," Baburam Bhusal, under secretary at MoCPA, told Republica. "If the guidelines is approved and thins go as per the plan, the funds will be set up in the current fiscal year," he added.
The government decision to set up the funds has come in the wake of recent cases of cooperatives running into trouble, leaving deposits of around Rs 10 billion of thousands of depositors at stake. "To reduce the risk facing financial cooperatives, arrangements will be made to safeguard the members' savings and loans up to a certain ceiling by establishing 'Cooperative Saving Safety Fund' and 'Cooperative Loan Investment Safety Fund'," reads the recently unveiled 'Policies and Programs of the government Fiscal Year 2015/16'.
According to a report of Gauri Bahadur Karki-led commission, as many as 12,962 people have filed complaints against 150 troubled cooperatives and made claims against them totaling Rs 10 billion -- Rs 7.6 billion in principal and Rs 2.4 billion in interest. The highest claim for deposits is Rs 5.5 billion against Oriental Cooperatives which is promoted by Sudhir Basnet.
According to Bhusal, the fund will protect deposits and loans of a maximum up to Rs 200,000 of the members of the cooperatives participating in these funds. "We have proposed in the working procedure that each member will contribute certain premium on the deposit, say 25 paisa per year for deposit of Rs 100, to participate in this scheme. The government will also contribute some amount to these funds. Whenever a cooperative runs into trouble, the fund will compensate a maximum up to Rs 200,000 to the member. Likewise, if a loan up to certain amount goes default, the fund will compensate for the loss to the cooperatives," said Bhusal.
"Participative cooperatives will collect premium from their members and deposit it to the fund which is likely to be administered by the Department of Cooperatives. However, working procedures and modality for operation of these funds will be made soon," he added.
Related story
Lending slows as banks focus on recovery of loans at fiscal yea...
