Co-ops with transactions of over Rs 50m to come under scanner

KATHMANDU, JUL 06 -

The Ministry of Cooperatives and Poverty Alleviation (MoCPA) is planning to scrutinize all savings and credit cooperatives with annual transactions of more than Rs 50 million.

The ministry has asked for the government’s okay to include the plan in its programme for the next fiscal year. According to a source, the ministry will form a comprehensive study team to carry out spot checks of large cooperatives. “A joint inspection team from the MoCPA and the Department of Cooperatives (DoC) along with its district-based division offices will examine the details about the functioning of the cooperatives,” said the source.

There are more than 26,000 cooperatives in the country, 11,000 of which are savings and credit cooperatives. Among them, an estimated 550 cooperatives have transactions valued at more than Rs 50 million annually.

The ministry has planned to probe the cooperatives amid growing anomalies seen in the larger ones. A study of 133 savings and credit cooperatives done by the DoC with support from Nepal Rastra Bank (NRB) also revealed a number of instances of bad corporate governance.

According to the ministry, the inspection team will investigate the management structure of the cooperatives besides analyzing their loan portfolio. “They will be investigated under the PEARLS monitoring system,” said the source. PEARLS is the measure recommended by the World Council of Credit Unions for creditors which the cooperatives are supposed to follow. PEARLS stands for protection of depositors’ money, effective financial structure with lending remaining at 70-80 percent of total assets, asset quality, rate of return and cost, adequate liquidity and sign of growth.

Meanwhile, the MoCPA is mulling initiating an effective information system for big cooperatives. It plans to order them to submit timely financial reports to the concerned authorities online. The ministry also plans to ask the government to provide land to open multipurpose commercial complexes to be operated by cooperatives at the regional level. The complexes will provide production cooperatives a platform for processing, packaging and selling their products directly. They will also end the role of middleman and benefit farmers directly. “We have asked the government to help open a complex in the Kathmandu valley in the first stage.”

Regarding issues related to the poor, the ministry has planned to expand its survey of the distribution of poverty identity cards in the remaining 50 districts in the next fiscal. According to the ministry, the baseline survey for distributing poverty ID cards has almost finished in the 24 districts selected for the first phase.

The ministry has also sought the government’s approval to initiate the third phase of the West High Hill Poverty Alleviation Programme. The programme, which has targeted improving the living conditions of people belonging to deprived communities, is being implemented in eight remote districts of Seti, Bheri, Rapti and Karnali zones.

Source: The Kathmandu Post