Cooperative monitoring regulation on the cards

KATHMANDU, JUL 07 -

Amid growing concerns about ineffective monitoring of cooperatives by the Department of Cooperatives, the government is coming up with a monitoring regulation.

Currently, the regulator has been the monitoring the sector without a set standard. There have been complaints that the lack of proper regulation of cooperatives resulted in frauds in the sector.

Officials at the Ministry of Cooperatives and Poverty Alleviation ( MoCPA ) said the ministry plans to monitor mainly three types of cooperatives — savings and credit cooperatives , consumers’ cooperatives and production-related cooperatives . “There will be separate parameters for each cooperative type,” said a senior ministry official.

The ministry plans to inspect activities and financial status of savings and credit cooperatives through PEARLS system — an internationally recognised system developed by the World Council of Credit Unions.

PEARLS demands protection of depositors with loan loss provisioning, effective financial structure where the institution could make good earnings, asset quality where defaults rate is low, better rate of return status, liquidity management, and sign of growth.

Given a huge amount of transactions being made through savings and credit cooperatives which are largely unregulated, this category of cooperatives is under greater risk.  

Almost all cooperatives which have been declared troubled are saving and credit cooperatives . More than Rs 11 billion of general people’s money has been stuck in these institutions.

The ministry has also planned to develop separate parameters for cooperatives related to agriculture and other production businesses. Assessment of productivity and production and operations costs will be the major tools for evaluating production-related cooperatives , acc-ording to ministry officials.

The number of jobs the cooperatives are providing will also be among the measures for assessing their performance, according to the officials. “We will be implementing only those parameters that are practicable in our context, although there are 93 different parameters in practice internationally in these types of cooperatives ,” one of the officials said.

Source: The Kathmandu Post