Lately, the cooperatives, one after another, are into financial crisis, due to their excessive investment in real estate, automobiles and other unproductive businesses, according to a high level official at the Department of Cooperatives, that is responsible for regulation of cooperatives confessed.
According to registrar at the Department of Cooperatives (DoC) Rudra Prasad Pandit, many cooperatives that had invested in unproductive businesses have been struggling to recover their loan.
He, however, neither took any responsibility nor explained, why his department failed to crack whip on those cooperatives, which have bad governance and also irresponsible lending to the real estate, especially on land ballooning the land price.
"Increasing cases of bad debt of the cooperatives is the main reason behind their financial problems,” he said, addressing a programme organised by the Cooperative Journalists Society Nepal (CJN), here today.
Most of the cooperatives have been facing liquidity crunch, and have been unable to return the money deposited by their members, as they have invested on the most unproductive sector, land. Some of the cooperatives have fled as they failed to return the money deposited by their members.
Pandit also attributed the problems faced by the cooperatives to the exorbitant interest rates. Lately, the commercial banks are offering 7 per cent to 8 per cent to depositors and they are most secured for depositors. But the cooperatives have been offering upto 20 per cent interest rate, which is unlikely to be paid back in the current market scenario.
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