Stakeholders call for merger of cooperatives

KATHMANDU, June 15: Stakeholders in the cooperatives sector have urged cooperative organizations to merge, considering the steady rise in the number of cooperatives and traits of financial anarchy.

According to a data, there are 34,737 cooperative organizations across the country. They have proposed the idea keeping in mind the disproportionate number of the cooperatives with respect to the current financial situation of the country.

Speaking at a meeting in the capital on Friday, co-chairperson of the National Cooperative Development Board, Dakshya Poudel, stated that mergers were necessary because of legal provisions for it in the Cooperative Act 2074 BS and Cooperative Rules 2075 BS.

He suggested merging the large number of cooperatives into fewer and stronger units was necessary at the moment, apart from commercializing the practice of cooperatives.

Poudel also expressed his concern about the lack of qualitative growth compared to the ever-rising quantity in numbers. “The market remains unregulated, owing to the large number of cooperatives in the market,” he said. “Shares must be united and larger entities must be established.”

This recent emphasis on merger of cooperative organizations comes after Nepal Rastra Bank suggested banks to merge. A number of cooperatives have already started merging on the basis of their work area.

Poudel also said it was urgent to institutionally develop cooperatives and use technology for sound financial practices.

“We need to implement commercial plans for the development of cooperatives, and rightly establish the importance of cooperatives in making Nepal a prosperous country.” Poudel said, requesting the funds of cooperatives to be deployed in productive sectors.

Land Management, Cooperatives and Poverty Alleviation Minister Padma Kumari Aryal has been calling for reducing the number of cooperatives to half within the next 5 years.

Surendra Bhandari, chairperson of Nepal Multipurpose Central Cooperative Association Ltd opined that there was no alternative to mergers for good governance over cooperatives in the country. “The local level has shelved files of cooperatives.” He said, “Absence of regulation could cause turmoil in the cooperative sector.” He also suggested establishment of Cooperative Division Offices in each of the 77 districts, and urged amendments in the existing Cooperative Act stating that it has been unable to incorporate the spirit of the cooperatives.

Similarly, coordinator of National Cooperative Bank, Ramhari Bajgain, suggested cooperatives to create and implement commercial plans. “Banks support promotion of cooperatives,” he said. “Cooperatives should operate via policies, procedures and technology.” Bhandari also mentioned the need to address the problems seen in the Cooperative Act.

The two-day summit, which saw participation of chairpersons and representatives of cooperatives from across the valley, concluded on Saturday.