Co-operatives heavily concentrated in Valley
KATHMANDU, DEC 24 -
Although cooperatives are primarily supposed to operate in rural areas, they are heavily concentrated in the Kathmandu valley. The country’s 19 percent of the cooperatives (5,032 out of 26,501 cooperatives) are based in the Kathmandu Valley as of 2011-12.
With bigger cooperatives operating in the valley, both deposit mobilisation and credit disbursement are also heavily concentrated in the valley, according to the Department of Cooperative’s statistics. The valley consists of three districts — Kathmandu, Lalitpur and Bhaktapur.
According to DoC, deposit collection of Kathmandu valley-based cooperatives accounted for 71.76 percent of the total collection by cooperatives across the country in the last fiscal year. Valley-based cooperatives’ deposit mobilisation stood at Rs 100.14 billion out of the total deposits of Rs 139.54 billion collected by cooperatives across the country.
Likewise, the valley accounts for 59.38 percent of cooperatives’ lending. Total investment by cooperatives throughout the country stood at Rs 134.03 billion, of which Rs 79.6 billion was invested by valley-based cooperatives.
DoC Registrar Kedar Neupane said cooperatives operators are mainly targeting the valley to earn more profits. “Cooperatives here are not actually demand driven, but are established due to the greed of business men,” he said, adding in many cases a single group runs cooperatives, real estate business and banks, among others.
Of the total cooperatives in the valley, saving and credit cooperatives have the largest share. They are also the ones that collect large amount of deposits and make lending. The valley consists of 4,044 saving and credit cooperatives out of 11,851 across the country.
There are a total of 5,032 different types of cooperatives operating in the valley.
Min Raj Kadel, president of the Nepal Federation of Saving and Credit Cooperative Union (NEFSCUN), said growth of cooperatives in the valley, however, has slowed down due to DoC’s introduction of new standards for opening a cooperative. “As per the new standards, participation of at least 25 families is a must for opening a cooperative,” he said.
On the concentration of cooperatives in city areas, Kadel said NEFSCUN has extended a programme to promote and educate rural area-based saving and credit cooperatives.
Proliferation of cooperatives has also put depositors’ money at risk as the sector is not regulated properly. The recent incidents of depositors struggling to withdraw their money from cooperatives like Guna, Oriental, Exim and Ugrachandi have raised alarm bell for decision makers.
According to the department, hardly 50 of cooperatives in the valley are cross-checked every year. This has encouraged many of them to involve in profit-oriented business rather than benefiting members.
A recent DoC inspection with support from the Nepal Rastra Bank identified a number of anomalies in valley-based cooperatives. These include transactions with non-members, family-run business , charging exorbitant service fees and offering high interest rates to attract depositors.
The department is now planning to encourage setting up of cooperatives in rural areas and. “For this, we have extended our programme on educating rural people and providing them training about the role and working of cooperatives,” said Neupane. “However, the department cannot stop the registration of cooperatives in the city areas as they are democratic institutions for community-based services.”
Districts > Deposits > Lending > Number
Bhaktapur > 6.07b > 6.13b > 525
Lalitpur > 13.52b > 13.25b > 929
Kathmandu > 80.55 b > 60.22b > 3578
Sub-Total > 100.14b > 79.6b > 5,032
Grand Total > 139.54b > 134.03b > 26,501
Source: The Kathmandu Post
