KATHMANDU, JANUARY 22
A total of 6,266 depositors have submitted petitions to the Cooperative Department of Kathmandu Metropolitan City, requesting a refund of approximately Rs 4.49 billion deposited in various cooperative organizations. These depositors are affiliated with 118 cooperatives that the metropolis has referred to the police for further investigation and action.
Namraj Dhakal, the head of the Cooperative Department in the metropolis, recently met with Pitambar Ghimire, the registrar of the Department of Cooperatives under the federal government, to discuss the current challenges facing the cooperative sector and explore potential solutions. Dhakal highlighted that out of the 1,917 cooperatives under the metropolis' jurisdiction, only 838 have submitted their annual reports. He also emphasized the need for better coordination between the Department of Cooperatives of the federal government and the Cooperative Department of the metropolis on various issues, including the management of troubled cooperatives, the Credit Information Center, and the Savings and Credit Guarantee Fund.
According to KMC, Registrar Ghimire proposed the establishment of a 'Crisis Cooperative Management Committee' within the metropolis to address the situation effectively. He suggested conducting a thorough assessment of cooperatives within the metropolis, developing a monitoring framework, and ensuring proper utilization of the cooperative promotion fund in accordance with federal regulations.
The lack of intergovernmental coordination has been a significant challenge in resolving cooperative issues. Sushil Subedi, head of the Cooperative Regulation Division in the KM, expressed concerns about the merger of cooperatives by the provincial department without consulting or informing the metropolis. He stressed the importance of conducting due diligence audits before any merger to assess financial risks and liabilities.
During the discussion, Deputy Registrar Raghunath Mahat emphasized the need for better intergovernmental coordination to manage the cooperative sector effectively. They suggested setting minimum standards for financial management software used by cooperatives to mitigate risks of financial irregularities.
The discussion also touched upon various issues faced by different stakeholders, including board members, depositors, borrowers, landlords, and employees. Complaints ranged from non-payment of rent to mismanagement of funds and lack of communication. The overall weaknesses in the cooperative sector were attributed to non-compliance with regulations, lack of democratic control, and improper investment practices.
In response to these challenges, the Government of Nepal transferred the Division Cooperative Office to the local level in 2074 BS. The Kathmandu Metropolitan City had already enacted the Cooperative Act, laying the groundwork for better governance and regulation of cooperatives in the region.
The main weaknesses of cooperatives are seen in aspects such as 'non-compliance with self-regulation', 'lack of democratic control system', 'monopoly', 'non-compliance with investment standards', among others. Investment without genuine purpose, acceptance and investment of savings outside the jurisdiction, investment beyond the members, sole proprietorship or one person being the director against the rules, and issues of taking and giving investment are common issues.
