As per the new registration law, at least 80 percent of the members of a cooperative need to be permanent residents of a single village development committee (VDC) or a ward -- a subdivision of a municipality. [break]
Since cooperatives can only be formed by a minimum of 25 people, the new provision means at least 20 people of a group need to be from one VDC or ward.
“If these cooperatives want to spread their businesses, they need to add 25 members each from every VDC or ward they expand to. And of the new members, at least 80 percent should be permanent residents of that area,” Lekh Nath Pangeni, an official of the KDCO, told Republica.
Prior to the enforcement of the new law in April, the cooperatives enjoyed the privilege of gathering minimum of 25 members from up to five VDCs or wards.
Because of this change, only 88 cooperatives were registered in Kathmandu district in the first five months of fiscal year ended mid-December, compared to 257 recorded in the same period in the last fiscal year, statistics provided by Kathmandu Division Cooperative Office (KDCO) showed.
Majority of the cooperatives registered this year are agricultural cooperatives. “And most of these units are involved in organic farming,” Pangeni said.
Other categories of cooperatives registered this year include consumer, health, and savings and credit. “But like in other years not a single multi-purpose cooperative has been registered so far this year,” Mani Ram KC, another official of the KDCO, said.
Another reason that pulled down the registration of new cooperatives this year, according to KDCO officials, is a new legal provision that requires all members of a new cooperative to undergo one-day training at the cooperative training center run by the government.
“Since each of these members has to fork out Rs 600 for this purpose, many just drop the idea of joining the group,” Pangeni said.
Coupled with this reason is the problem of over-saturation of cooperatives in the market due to which many have weaned themselves from the idea of opening more of such units, Krishna Prasad Sharma, a senior official of the KDCO, said.
Kathmandu district alone has around 4,000 cooperatives. This means there is one cooperative for every 435 residents of Kathmandu, if one goes by the National Population Census Report 2011, which puts the district´s population at 1.74 million.
“This is simply too much,” Sharma said.
In total, 23,301 cooperatives are operating in the country as of mid-July, mobilizing a share capital of Rs 20.22 billion.
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