DoC demands status report from troubled cooperatives

KATHMANDU, JAN 22 -

The Department of Cooperatives ( DoC ) has begun taking up the matter of cash-strapped cooperatives falling behind in repaying their depositors with the operators after a number of such occurrences.

On Monday, the department asked Rajendra Shakya, proprietor of Guna Cooperatives, about its financial status. Guna, one of the biggest cooperatives in the country, has been facing difficulties returning its deposits for the last five months. DoC registrar Kedar Neupane said that Shakya pledged to repay its depositors by transferring ownership of the cooperative’s fixed assets or paying cash.

The Guna Group, which also owns Guna Airlines, recently sold the carrier to Simrik Air for Rs 350 million. The group operates a number of businesses including a bullion shop. According to Neupane, Shakya promised to repay the depositors in gold from his shop if it became necessary.

Meanwhile, the DoC said it would call the proprietors of other troubled cooperatives like Ugrachandi, Corona and Exim to ask them how they planned to repay their depositors.

“We will take legal action against those cooperatives that fail to report their financial position to the department,” said Neupane. In addition to cooperatives, real estate projects have been facing problems, he added.

Meanwhile, another big cooperative Oriental Savings and Credit Cooperative is in deep trouble. Its chairman Sudhir Basnet is behind bars on fraud charges and he has huge liabilities to the depositors of his cooperative, the clients of his housing projects and the banks and financial intuitions (BFIs) that financed them.  

Governor of Nepal Rastra Bank (NRB) Yubaraj Khatiwada invited officials from the DoC on Tuesday to find ways to address the plight of depositors of Oriental, one of the country’s largest cooperatives. Deposits totalling Rs 3.89 billion of its more than 7,000 depositors are at risk. They have not received a single penny from the cooperative for the last two months.

The NRB governor’s move came after the depositors of Oriental met him on Sunday and requested his help to recover their deposits. Neupane said that two regulators would discuss Oriental’s problems to find a way which is in the best interest of the depositors.

During the meeting with the NRB governor, the depositors asked for a comprehensive solution of all the debts owed by Basnet to Oriental’s depositors, the BFIs that financed his housing projects and those who booked his apartments and housing units.

Lokeshwor Ranjit, chairman of the Depositors’ Welfare Protection Committee of Oriental, said that they had sought a solution under a single package while meeting the NRB governor, finance minister, chief secretary and secretaries of the government. “Given that Oriental does not have secured collateral while loans went to Basnet’s projects, we have asked that the BFIs ensure that the amount collected through the sale of his collateral should be allocated for Oriental depositors too provided that the amount exceeds Basnet’s liabilities to the BFIs.

Another option floated by them is that depositors at Oriental would purchase the apartments being built by Basnet by making available extra funds to complete the project under strict supervision of the depositors.

However, Basnet’s arrest on charges of fraud has made it complicated for this possible solution. Basnet has been accused of committing fraud worth Rs 4.45 million. Despite the risk of losing their money, many depositors of Oriental and the people who booked his apartments have not complained to the police for legal action. “It will take a long time to complete the legal proceedings, and we are not sure whether such a move will help us recover our deposits,” said Ranjit.

Basnet is currently facing problems in all his ventures ranging from real estate and airline to the cooperative. Most of his housing and apartment projects are incomplete, and banks are not willing to lend more to his projects. They have also been pressuring him to repay his loans.

The banks that financed his airline Agni Air have issued a notice to auction off its three Jetstream 41 and two Dornier aircraft, spare parts and land in Bhaktapur. Grand Bank, Sunrise Bank and International Leasing and Finance Company have lent Rs 650 million to Agni Air.

Source: The Kathmandu Post