The government is planning to form a separate agency to monitor big cooperatives after central bank refused to monitor them.
Department of Cooperatives is creating a new agency, said registrar of the department Sudarshan Prasad Dhakal.
"We have submitted a detail proposal to the Ministry of Agriculture and Cooperatives to form a separate agency inside the department," he said, adding that the ministry has forwarded the proposal to Finance Ministry and Ministry of General Administration for their consent in budgeting and staffing issues.
"It will come under the department but gets a separate jurisdiction to monitor cooperatives," he said, adding that it will start monitoring and inspection from cooperatives that have over Rs 50 million annual transactions.
There are around 15,000 saving and credit cooperatives in the country but some 200 cooperatives have such big transactions.
Most of the big cooperatives are in the Kathmandu Valley, Kathmandu, Lalitpur and Bhaktapur districts. Around 12 per cent cooperatives are in the major towns like Biratnagar, Pokhara, Birgunj, Butwal and Nepalgunj.
According to him, the department has proposed a joint-secretary level chief monitoring officer, five section officers and a dozen of supporting staff for the monitoring wing. "Nepal Rastra Bank (NRB) will provide technical support to the team," Dhakal said, adding that the central bank is also positive on the new agency.
The department data revealed that cooperative sector has around Rs 111 billion deposit and mobilised loans worth Rs 97 billion in the different sectors. Savings and credit cooperatives have a share of 87.38 per cent deposits and almost equal share in lending too.
Financial activities of saving and credit cooperative has come under public criticism in recent years as they are not abiding by the basic norms of cooperative – cooperation and collaboration among members but are more profit oriented and have lent heavily on lands.
The economists have been urging the government to strictly monitor the sector for the financial sector's stability. And, the government has promised to monitor big saving and credit cooperative through central bank in the budget for the fiscal year 2011-12.