New ordinance paves way for formation of Co-ops Asset Management Committee

KATHMANDU:

With the promulgation of the Cooperatives Ordinance, the Ministry of Cooperatives and Poverty Alleviation (MoCPA) can now form a committee to recover public deposits embezzled by savings and credit cooperatives and take action against promoters and management staff of such institutions.

President Dr Ram Baran Yadav yesterday put seal on the ordinance, paving the way for formation of the Cooperatives Asset Management Committee (CAMC), which will be given full authority to launch investigations into cases of embezzlements at savings and credit cooperatives and take necessary action against wrongdoers.

“We will form the committee once we officially get a copy of the promulgated ordinance,” MoCPA Joint Secretary Suresh Pradhan told The Himalayan Times.

Earlier, a high-level commission formed to launch investigation into troubled savings and credit cooperatives had found that 12,962 depositors of 162 cooperative units risked losing Rs 10 billion, including Rs 7.60 billion in principle amount and Rs 2.40 billion in interest, because of haphazard lending practices.

Of the total amount at risk, over 50 per cent of the amount, or Rs 5.5 billion, was found to have been parked at Oriental Cooperatives. This amount was exclusive of Rs 1.36 billion that Oriental’s Chairman Sudhir Basnet owed homebuyers, whom he had pledged to provide housing units or apartments.

Despite these revelations, the high-level commission formed under former chairing judge of the Special Court, Gauri Bahadur Karki, could not take action against promoters and management staff of those cooperatives because of lack of provision in the Cooperatives Act.

“We hope these clients who have lost money will get relief once the committee is formed,” Pradhan said.

Most of the depositors of savings and credit cooperatives park small, but hard-earned, funds earned through self-employment, small businesses and ordinary jobs. So, misappropriation at cooperative units hits them hard.

To prevent savings and credit cooperatives from engaging in financial irregularities, the Cooperatives Ordinance has also included provisions for harsh punishments and fines, including imprisonment of up to seven years for those found guilty.

Earlier, authorities could not slap fine of more than Rs 1,500 on cooperatives, and action could be initiated against wrongdoers only after filing of police complaint by cooperative members.

Source: THT