Co-ops Stakeholders panel to hold study

KATHMANDU, DEC 13 -

After large cooperatives faced liquidity crisis, stakeholders concerned have decided to form a broad committee to initiate a study on troubled cooperatives.

The High-Level Cooperative Strengthening Committee includes representatives from the National Cooperatives Federation (NCF), Department of Cooperatives (DoC), Nepal Federation of Saving and Credit Cooperative Union (NEFSCUN) and National Cooperative Bank (NCB), among others.

DoC Registrar Kedar Neupane said the need for the study was felt after large cooperatives with a huge deposit mobilisation landed in trouble. “As cooperatives hold a huge amount of deposits, any trouble will affect the entire financial sector,” he said.

The committee led by NCF President Keshav Badal will carry out a comprehensive study on troubled cooperatives, including Oriental, Guna and Exim, and propose corrective measures. The committee will coordinate with the Ministry of Cooperatives and Poverty Alleviation, Finance Ministry and Nepal Rastra Bank for the study.

“It (the study) will try to identify the actual problems,” said Min Raj Kandel, president of NEFSCUN. “If cooperatives are found involved in ill practices, the committee will recommend the government to take action against them.”

The committee will hold discussions executives of troubled cooperatives. “Some of the cooperatives have landed in trouble due to their inability to analyse risk, but executives at some are intentionally involved in ill practices,” said NCF President Badal. “Hence, the committee will try to find out their problems based on the nature of the crisis.”

According to DoC, the crisis seen in cooperatives, especially in saving and credit cooperatives, is due to excessive lending to the realty sector. After the Nepal Rastra Bank (NRB) tightened commercial banks’ lending to the sector, cooperatives’ lending ot housing and real estate started to surge. The crisis in two large cooperatives—Oriental and Guna—is also due to excessive exposure to the realty sector.

The first meeting of the committee held on Wednesday has identified lack of regulatory measures as the main cause of problems.

According to Kandel, the meeting has forwarded a seven-point recommendation to resolve problems in the sector. The recommendations include effective implementation of the report submitted by the taskforce formed under the National Planning Commission last year and amendment to the Cooperatives Standard 2011.

Besides focusing on current issues, the committee has also planned to forward a long-term strategy to solve the problems in cooperatives. According to Kadel, the panel has decided to form a district-level mechanism to control possible irregularities.

Source: The Kathmandu Post