KATHMANDU, Dec 30: The government has initiated the process to return the money of small depositors of troubled cooperatives on priority basis, while those with higher amounts will be getting their money equitably out of the amounts received from liquidation of fixed assets of those cooperatives.
President Ram Chandra Paudel issued the Ordinance 2024 to amend some laws related to cooperatives on Sunday, with a provision to address the ongoing impasse seen in problematic cooperatives.
A cabinet meeting held last Tuesday decided to bring the ordinance on cooperatives and recommended it to the President for final approval.
According to government statistics, there are 62,760 depositors who claim to be the victims of the troubled cooperatives. The study report of a parliamentary special committee led by CPN-UML lawmaker Surya Thapa concluded that 40 cooperatives have embezzled a total of Rs 87 billion of their depositors’ money.
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At a time when the country has been facing economic stagnation for a long period, one of the major causes of which has been attributed to ongoing problems in many cooperatives, the government has finally stepped up efforts to find solutions to solve the stalemate. The ordinance talks about returning the deposit amounts of up to Rs 500,000 on priority basis. “The amount above the aforementioned figure will be returned from the liquidation of assets and credit amounts recovered from borrowers by equally distributing among the remaining depositors,” reads the ordinance.
The ordinance mentions the formation of a 'National Cooperative Regulation Authority’ to solve the problem of cooperatives. The five-member authority will be led by a senior government official who has a 15-year experience of working in banks and financial institutions or cooperatives.
The government has claimed to have returned more than Rs 1.51 billion to the depositors of troubled cooperatives so far. It accounts less than two percent of the total embezzled amount.
The ordinance, however, mentions taking collateral of the defaulting borrowers to auctions, to recover rental of fixed property owned by cooperatives and release the frozen assets kept in collateral while issuing loans by cooperatives.
Likewise, the ordinance seeks to make the Credit Information Center to look after bad loans in cooperatives to blacklist the defaulters. “The cooperatives will have to inform the center mandatorily about the loans worth more than Rs 1 million along with the details of defaulters to the center.”
Similarly, the ordinance is imposing limits on money to be deposited by individuals in cooperatives. An individual will not be allowed to deposit more than Rs 1 million in cooperatives regulated by local bodies. The limit is Rs 2.5 million for those under the jurisdiction of provinces and it is Rs 5 billion for the cooperatives under the federal government.
“If anyone expects to deposit beyond the prescribed limits in cooperatives, they will have to disclose their sources. Similarly, those having deposits more than the limit will be given a deadline of the next two years to bring their amounts within the limits,” reads the ordinance.
