Wednesday, October 30, 2013

Government removes deposit ceiling for co-operatives

Ministry of Cooperatives and Poverty Alleviation bowing down to the various cooperatives associations' pressure removed the ceiling on deposit collection by cooperatives from the proposed cooperative regulation.
The ministry had earlier, provisioned not to allow the cooperatives to mobilise more than Rs 3 million from a single depositor or more than 10 times the individual’s share in a cooperative.
Earlier, the proposed regulation was planning to ask the cooperatives with individual deposits exceeding Rs 3 million to bring them down to the fixed level within six months from the date of implementation of the new regulation.
Earlier two task-forces – one led by central bank deputy governor Maha Prasad Adhikari and another led by joint secretary Baikuntha Aryal – had recommended to fix ceiling on deposits in cooperatives from mobilising deposits more than their financial capacity to save the depositors and avert the financial risk due to lack of proper supervision and weak legal provision.
Similarly, the ministry has also become flexible on board members holding executive positions. "A separate board and management is mandatory in urban areas, whereas it could not be strictly applied in rural areas," the ministry added.
Meanwhile, there are some 2,789 cooperatives – by the end of the last fiscal year 2012-13 – that carry out transactions worth more than Rs 10 million annually in Kathmandu district. Some 618 have an annual transaction worth over Rs 50 million, whereas some 18 – 16 from Kathmandu and two from Jhapa – of them exceed Rs 500 million annual transactions. Likewise, some 756 cooperatives in Kathmandu have transaction between Rs 10 million and Rs 50 million annually, with 205 of them doing annual transaction exceeding Rs 50 million, whereas Lalitpur has 50 and Bhaktapur has 28 with annual transaction exceeding Rs 50 million.

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