National Cooperative Policy-2013: New plan seeks to promote non-profit cooperatives

KATHMANDU, MAR 11 -

The newly introduced National Cooperative Policy-2013 aims to promote non-profit cooperatives, particularly related to the agriculture sector, while controlling profit-oriented ones such as saving and credit and multipurpose cooperatives.

The policy has announced a number of facilities for non-profit cooperatives, and various controlling measures have been planned for profit-oriented ones.

Of late, several anomalies have appeared in profit-oriented cooperatives due to poor regulation and supervision despite their larger scale transactions, putting pubic deposits at risk. To address the situation, the policy has barred such cooperatives from carrying out multiple business es as it wants to promote specialisation in them.

“This policy will be implemented immediately in urban areas,” states the Policy which was recently endorsed by the Cabinet. “There are several instances of a single cooperative putting hand in different fields. This way, they cannot invest their resources in proper places, inviting risk to their financial health,” said Sudarshan Dhakal, spokesperson for the Ministry of Cooperatives and Poverty Alleviation.

The policy has provisioned that anybody willing to open a profit-oriented cooperative will have to first submit a feasibility study about the proposed institution’s potential. Based on the study report, the regulator will decide whether to allow registration of a new cooperative.  “Specific working guideline will be developed for this purpose,” states the policy.

It has also provisioned compulsory merger between those failing to fulfil certain standards set by the regulator. The policy says the merger would be encouraged by ensuring additional incentives.

The new policy has talked about putting in place a provision to control cooperatives’ concentration in urban areas and encourage them to go to rural areas with low financial access.

“If symptoms of unhealthy competition among cooperatives of the same category in certain geographical area emerge, a moratorium on new registration will be imposed in the area for a certain period,” states the policy.

The regulator can also halt registration of new cooperatives in areas where cooperatives are present in huge numbers, according to the policy. Similarly, members of proposed cooperatives will have to sit for the training related to cooperatives’ daily operation.

The new policy has sought a continued monitoring of financial transactions and conducts of cooperatives with combined efforts of the Nepal Rastra Bank, Department of Cooperatives (DoC), Central Cooperatives’ Association and Small Farmers’ Development Bank, depending on the size of the cooperatives. “Adequate resources will be made available to the regulator to effectively implement the policy.”

As the DoC has long been complaining about the weak Cooperative Act due to which it has been difficult to control unethical practices in the sector, the policy has talked about introducing a separate Act to make transactions of cooperatives more secure and reliable.

Amid a single person taking membership of different cooperatives promoting cross-interest, the new policy seeks to adopt “One member—One Cooperative” policy. The regulator will also require to seek details of financial transactions of large cooperatives on monthly and annual bases amid some cooperatives growing larger than finance companies.

In order to safeguard depositors’ money, the policy seeks to set up a deposit security fund in line with banks and financial institutions (BFIs), whose individual deposits up to Rs 200,000 have been insured by Deposit and Credit Guarantee Corporation.

Other provisions in the new cooperative policy include effective credit information system to make investment secure. In case of BFIs, the Credit Information Bureau keeps record of credit history of clients so that a BFI can decide on whether to sanction loans based on the credit history of a particular person.

In order to promote agriculture cooperative related to dairy, tea, vegetables and fruits, bee keeping and sugarcane, among others, the policy has talked about encouraging cooperatives to production of agriculture goods, imports and exports. It has also assured soft loans and grants for such cooperatives.

Source: The Kathmandu Post