NRB governor for specialised body to regulate cooperatives

KATHMANDU, APR 01 -

Nepal Rastra Bank Governor Yubaraj Khatiwada has stressed on the need for setting up a specialised body to regulate and supervise cooperatives amid increasing fraudulent activities in the sector.

The central bank’s attempt to form such a body could not materialise as a bill in this regard was not passed by the Parliament due to strong lobbying from cooperatives promoters.

A recent monitoring on 133 cooperatives, most of them savings and credit and multipurpose cooperatives, by the Department of Cooperatives (DoC) revealed rampant violation of norms.

However, the department has been holding the “weak” Cooperative Act for responsible for its failure to take action against rule violators.

Presenting a paper at a programme here on Sunday, Governor Khatiwada stressed on the need for continued monitoring by board members and other shareholders to strengthen the cooperatives movement. The programme was organised to mark the 56th National Cooperatives Day that falls on Tuesday.

Given the regulator — the DoC — itself complaining about the “weak” Cooperative Act, Khatiwada said if savings and credit cooperatives are opened just to avoid international-level compulsory directives from regulators, it is ironical. “The trend of transactions in big cooperatives and breach of corporate governance at a few of them have posed risks to the general public’s deposits,” he said.

He also stressed on bringing the National Cooperative Bank under a special Act or through the revision of the current Bank and Financial Institution Act (BAFIA). “The bank, which provides bulk credit to cooperatives, should be developed as an umbrella bank of cooperatives and similar banks should be opened at regional level,” he said. Given the government’s failure to run state-owned corporations well, with a large number of public enterprises incurring losses, the governor suggested handing over government-owned factories, agriculture farms and market centres to cooperatives.

Khatiwada said the cooperative sector has come up as an effective means for capital formation and employment promotion in rural areas. “The sector could help expanding production, processing and market in the rural economy, which is seeing an influx of remittance.”

Stressing on the need for involving cooperatives in delivering goods to the market, he said the move would discourage middlemen from making hefty profits that affects producers and consumers.

As cooperatives could provide raw materials to industries and help the private sector, Khatiwada urged the private sector not to consider cooperatives their competitors, but complementary.

Source: ekantipur