Deviation of cooperatives from its core principle coupled with increasing financial indiscipline have become a major problem recently, according to a high government official.
The increasing number of cooperatives also need to be managed for the security of public deposits, said secretary at the Office of the Prime Minister Krishna Hari Baskota, here, today.
If cooperatives continue to deviate from their core principle, the problem will increase, he said, adding that though cooperatives are necessary, they have to be regulated by the government.
Directing the National Cooperatives Association to correct the current behaviour and working style of cooperatives, Baskota said that cooperatives are acting like banks, are family run, not following the core principle of cooperatives, over exposed to realty loans and have been involved in financial indiscipline, which will ultimately damage the cooperative sector as a whole. "However, the government will encourage cooperatives that are operating according to the core principle."
Baskota also stressed on the need for a joint effort of the private sector and cooperatives for economic development. "The government will prioritise cooperatives in the next fiscal year's budget too, though its urgent to regulate them," he added.
Despite the government's tall claim to regulate cooperatives, the public are still being cheated by the cooperatives. Some cooperatives have more deposits than banks. And they are luring the public with much higher interest rates. Earlier last week, victims of Oriental Cooperatives had threatened to take strong action if the cooperative fails to return their deposits as it collapsed four months back with deposits worth Rs 4 billion from over 7,000 depositors.Victims had urged the government to take strong legal action against those who misuse their deposits