The government is
planning to set the upper limit for the interest being offered by cooperatives.
The Department of Cooperatives has been doing homework to set the interest rate
soon, said registrar of the department Kedar Neupane.
"Interests being
offered by cooperatives are either equal or more than that being offered by
commercial banks," he said, adding that the ceiling will be applicable for
both deposit and lending.
The department decided
to take action because of the rise in instances of savings and credit
cooperatives running away after collecting millions from people. "The new
directive will be introduced soon to control the trend," said Neupane.
Currently, commercial
banks have been offering an average six per cent interest on deposits, but
cooperatives have been offering up to 16 per cent interest. People are
attracted towards high interests and have deposited huge amounts of money in
cooperatives, he said.
The cooperatives have
been mobilising more deposits than the development banks and finance companies,
which have Rs 127.30 billion and Rs 76.11 billion worth deposits, respectively.
One of the bigger and
troubled cooperatives, Guna Cooperatives had only Rs 20 million paid-up capital
in the fiscal year 2010-11. Guna cannot mobilise more than Rs 200 million
deposits, according to the regulation that states that savings and credit
cooperatives cannot mobilise deposits more than 10 times the paid-up capital.
But Guna had mobilised Rs 321.99 million — Rs 121.99 million more than permitted level — despoits in the last fiscal year 2011-12. Similarly, it had lent Rs 346 million, which was more than the deposits.
But Guna had mobilised Rs 321.99 million — Rs 121.99 million more than permitted level — despoits in the last fiscal year 2011-12. Similarly, it had lent Rs 346 million, which was more than the deposits.
Similarly, Oriental
Cooperatives had mobilised Rs 3.5 billion deposits and Exim Cooperatives had
mobilised Rs 470 million deposits, whereas they were all hugely exposed to real
estate sector against the universal norms of cooperatives movement.
Though, the government had been time and again promising to regulate the mushrooming the cooperatives, the political pressure from CPN-UML and UCPN-Maoist made it difficult to monitor and regulate them by forming a second tier regulatory authority.
Though a recently
formed Ministry of Cooperatives and Poverty Alleviation has forwarded a draft
of the National Cooperative Policy 2012 to the cabinet for approval, it has
been balmed for less homework which will make the third pillar of the economy
is going collapse.Though, the government had been time and again promising to regulate the mushrooming the cooperatives, the political pressure from CPN-UML and UCPN-Maoist made it difficult to monitor and regulate them by forming a second tier regulatory authority.
Weak monitoring
mechanism coupled with government's apathy before declaring cooperatives third
pillar of economy has not only fuelled irregularities in the cooperatives
sector but also encouraged the 'foul players' to swindle people's hard earned
money.
The Cooperatives Act
1991 prohibits cooperatives from publishing advertisements about interest and
other offers in the media but big cooperatives — that have mobilised billions
in deposits — have not only flouted the rule but also misued the public money
by investing on realty sector.
According to the
department, about a dozen cooperatives in Kathmandu valley are facing problems
in returning deposits due to huge investments in the realty sector.
"People blacklisted by banks have been fueling problems in
cooperatives," said Neupane without elaborating on it. "We are also
building measures to check that."
National Cooperatives
Association has vouched to solve the problem by identifying the actual
situation. "We have developed a committee to support problematic
cooperatives," said president of the association Keshav Badal.
Similarly, president of
Nepal Association of Savings and Credit Cooperatives Minraj Kandel said that
his organisation will establish a risk fund to support savings and credit
cooperatives.
The Department of
Cooperatives’ revealed that cooperatives across the country had mobilised
deposits worth Rs 139.54 billion in the last fiscal year.
Currently, there are 26,501 cooperatives across Nepal, including 11,851 saving and credit cooperatives. In last fiscal year 2011-12, some 3,200 new cooperatives were opened, including 854 saving and credit cooperatives, but lack of manpower and proper monitoring agency with technical support has given the cooperatives bad name.
Currently, there are 26,501 cooperatives across Nepal, including 11,851 saving and credit cooperatives. In last fiscal year 2011-12, some 3,200 new cooperatives were opened, including 854 saving and credit cooperatives, but lack of manpower and proper monitoring agency with technical support has given the cooperatives bad name.
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