Kathmandu, August 17

The complaints related to fund embezzlement and depositors getting duped by cooperatives continue to escalate even as the government, in recent years, has tightened the noose around the operators of such institutions.

As per the Division Cooperative Office (DCR) Kathmandu, 80 cases related to fraud and problems in cooperatives were filed at the authority in fiscal year 2016-17 against 45 in fiscal 2015-16.

According to Ananda Saru, senior cooperative officer at DCR, a majority of the depositors have complained that the cooperatives are not returning their money. “Among the 80 registered cases of last fiscal, most are related to the depositors not being able to get their money back,” he said.

He also said that the cooperatives sector continues to be riddled with problems owing to certain loopholes in the Cooperatives Act 1991. “Some managers are continuing to exploit these loopholes in the law. But the government is in the process of amending the older laws and making this sector better,” he added.

Some complaints registered at DCR are related with collateral too. According to Saru, a number of cooperatives have been found to be demanding bigger collateral when floating loans. “Requiring the borrower to put in collateral that surpasses the loan amount by many folds is another major malpractice in the sector,” he said.

Similarly, the dispute between the board of directors and management is also creating various problems.

“We have come to find out that in numerous cases, the board members put pressure on the management to issue credit without or very less collateral and then piles more pressure at the time of consolidation — this creates a rift between the board and the management, which at times gets very ugly,” Saru said.

According to a study conducted by DCR last year, 130 cooperatives located in Kathmandu district alone are riddled with internal problems. Most of these cooperatives reported dispute between the management and the board members.

Moreover, the study revealed that 45 cooperatives have gone ‘out of contact’ with the government authority. Those cooperatives have been listed as ‘vanished cooperatives’ by DCR.

DCR is not authorised to settle all the issues related with fraud and problems in cooperatives. In case it receives such complaints, it forwards the cases to the police.