Over the past year, Jaya Siddhi and Mission Credit Cooperatives fled with deposits of around Rs 70 million, leaving the depositors in the lurch. [break]
The Division Cooperative Office (DCO), Kathmandu has records of amounts embezzled by only 20 cooperatives, which are among 50 unscrupulous cooperatives.
Those misappropriating deposits made by the public are Nobel Multipurpose, Unity Finance Cooperative, Quality, Shree Laxmi, Nawa Tara, Kamana, Tridev, Astha, Bagalamukhi, Creative, Budha Nilakantha, Chhigu, Peace Nepal, Shikhar, Shuva Kamana, Kalbhairav, Sagaurav, Siddhartha, Rising Star and Center Saving and Credit Cooperatives. The amounts embezzled by the other absconding cooperatives have not been recorded.
Despite the growing number of cooperatives becoming involved in irresponsible doings, a report prepared by DCO Kathmandu shows that action has been taken against only one of them, with the filing of a court case.
“Cases of misappropriation of deposits have gone up in recent years with the rise in the number of cooperatives and insufficient human resources for proper monitoring. We do not have sufficient authority to treat them like banks and financial institutions in case of violation of the existing Cooperative Act,” said Sudarshan Dhakal, registrar at DoC, Kathmandu.
The existing Cooperative Act empowers the DoC to slap a penalty of Rs 1,500 if a cooperatives fails to submit its financial report within the stipulated time, and cancel its registration.
Amid growing threat posed by the burgeoning number of SCCs violating the Cooperative Act, the government has made it mandatory for all savings and credit cooperatives to submit their financial reports on a monthly basis to the offices concerned. The DoC directed all SCCs in Kathmandu to submit monthly financial reports after the high-level Financial Sector Coordination Committee led by Finance Minister Surendra Pandey endorsed the new provision recently.
Dhakal said that SCCs that have transactions of over Rs 50 million must submit their financial reports to the DoC whereas smaller SCCs are directed to report to the cooperatives overseeing them.
“As per existing provisions an audited financial report must be submitted by mid-September-- two months after the end of the fiscal year, and the reports endorsed by the annual general meetings within five months of completion of the fiscal year. As this long process for establishing the status of SCCs could not become effective, we brought in the provision of submitting the reports every month,” Dhakal told Republica.
Dhakal said the new provision is for immediate implementation, so SCCs have to submit their financial reports from mid-February, 2011 onwards.
The DoC has directed SCCs to submit particulars including status of their share capital, reserves, deposits, assets, cash balance, non-performing loans, loan loss provisions, total investment, profit and loss, loan recovery, interest on loans and deposits, number of members and number of employees, among others.
Keshab Thapa, chief of Kathmandu Cooperatives, said out of around 2,200 SCCs in the Valley, some 100 are handling funds of over Rs 50 million.
Though cooperatives are mushrooming in Kathmandu, only seven cooperative inspectors-- two non-gazetted first class and five non-gazette second class-- are deployed for monitoring them. “Given the existing manpower, we can´t monitor the SCCs properly and analyze their financial reports,” said Thapa.
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