Depositors Rs 3.89b at risk
DEC 05 -
Trouble at Oriental Saving and Credit Cooperative, one of country’s largest cooperatives, has put deposits worth Rs 3.89 billion of over 7,000 depositors at risk.
With the cooperative struggling to payback depositors’ money, Oriental offices are witnessing long queues of depositors for the last two months.
Until mid-November, Oriental had been paying Rs 10,000 daily to individual depositors, but it has completed halted withdrawals for the last few days.
On Tuesday, Oriental organised a meeting with depositors in Maitidevi, Kathmandu, to calm depositors. In front of around 600 depositors, Oriental Chairman Sudhir Basnet, along with five other board members, assured the depositors that would pay back their deposits phase-wise.
For deposits up to Rs 200,000, they said they would pay back the amount in the next six months on instalment basis (Rs 20,000 at a time). They, however, did not talk anything about bigger depositors.
Basnet said the cooperative needed Rs 350 million immediately to solve the liquidity problem. “We have fixed the price of our property at Naxal at Rs 600 million and expected sell it by the third week of December,” he said. In the second phase, Basnet has planned to sell the Vegas City in Imadol, Lalitpur, that is worth more than Rs 500 million.
Basnet also assured the depositors that he would not run away without paying his liabilities. “I am even ready to hand over my passport to the District Administration Office to confirm my commitment,’ he said.
Basnet is currently facing multiple problems in his business ventures, including real estate, airline and cooperative. Most of the real estate projects promoted by Basnet, including Kohinoor Hill House, Imperial Housing and Vegas City, are yet to be completed. Basnet is currently negotiating with the prospective buyers to sell Agni Airlines.
Despite Basnet’s assurance, the depositors are not convinced given his involvement in several real estate projects that have failed to generate revenues and his failure to live up to his earlier commitments. “His words are not convincing. We will sign an agreement with him based on his words to ensure the withdrawal of our deposits,” said Lilaraj Poudyal, joint coordinator of the Depositors’ Welfare Protection Committee.
Basnet had committed to pay interests to all depositors based on depositors’ segment before Dashain, according to the depositors. “But he failed to pay a single penny,” said Poudyal.
Depositors have also formed four sub-committees to look after Oriental’s financial, legal, land and apartment and government-related affairs. “We will leave no stone unturned to make our deposits paid,” said Poudyal.
The depositors have suspected that Basnet used depositors’ money for his personal real estate projects. The liquidity problem began in the cooperative after these projects failed to generate cash due to recession in the sector, they suspect.
Oriental, established one and half decades ago, was luring depositors offering relatively higher interest rates. Anita Pradhan, a depositor from Chhauni, deposited Rs 3 million in the cooperative two years ago as it promised 17 percent interest rate. She withdrew her money from the Employees Provident Fund (EPF) to deposit in Oriental.
Similar is the situation with another cooperative ‘Guna Saving and Credit Cooperative’ promoted by Rajendra Shakya, also a big real estate player. “Although the cooperative said it would give Rs 3,000 daily to 200 people, it is hardly giving money to 40 people,” said Bijay Ratna Bajracharya, a depositor from Patan.
Tek Prasad Neupane from Dhapasi, who has deposits worth Rs 90,000 in Guna, was provided a token for withdrawal a week ago, but has failed to get back his deposits. “I have been told that I will get back the payment only after a week,” he said.
The Department of Cooperative, however, is not in favour of taking any punitive action against the promoters and directors of these cooperatives.
“We have been pursuing the promoters of these cooperatives to repay on the basis of consensus with the depositors,’ said Krishna Prasad Sharma, a senior officer
at the Division Cooperative Office, Kathmandu. He said that these cooperatives landed in trouble due to over exposure to the real estate sector.
In the case of Exim Cooperative, which is also in trouble due to misuse of funds by its promoters and directors, the division cooperative has asked the police to initiate legal action against the directors on charge of fraud.
Source: The KathmandU Post
