DoC to get reinforcements to monitor co-ops

KATHMANDU, AUG 31 -

The government has planned to involve multiple agencies in monitoring cooperatives as the Department of Cooperatives (DoC) has been having a hard time doing it alone.

A draft of the cooperatives regulation prepared by the Ministry of Cooperatives and Poverty Alleviation (MoCPA) has envisioned that a number of agencies including Nepal Rastra Bank and the Central Cooperatives Association will join forces with the DoC.

“The current mechanism has not been effective due to the rising number of cooperatives and the limited human resources at DoC,” said MoCPA spokesperson Sudarshan Prasad Dhakal. The draft of the regulation will be submitted to the Cabinet by mid-September, he added.

As per the proposed regulation, the ministry will coordinate the monitoring. Similarly, the task will be divided among the agencies on the basis of the turnover of the cooperatives.

There are more than 25,000 cooperatives in Nepal, out of which more than 11,000 are savings and credit cooperatives. They hold deposits valued at Rs 127 billion while their investments amount to Rs 136 billion.

According to the DoC, around 700 savings and credit cooperatives have an annual transaction in excess of Rs 50 million. Following their explosive growth, the DoC has been struggling to monitor them effectively with its limited resources.

Currently, the department has been conducting monitoring with the help of two officials from the central bank. However, it has been able to check only around 100 cooperatives in the last two years.

In the absence of an all-powerful regulatory body like the central bank to monitor cooperatives, there are fears that public deposits might be at risk with most of the cooperatives not following prudential financial norms.

The proposed regulation has envisioned categorising cooperatives into four segments depending on their annual transaction. According to Dhakal, cooperatives with a yearly transaction of over Rs 250 million will be put under A category, and those with transactions in the range of Rs 50 million-Rs 250 million will be put under B category.

Similarly, the C category will consist of cooperatives with an annual transaction of between Rs 10 million-Rs 50 million while the rest will be lumped together in category D.

Source: The Kathmandu Post