Toothless Cooperative Act blamed for irregularities

KATHMANDU, AUG 06

Lack of provisions in the Cooperative Act has encouraged financial crime in the cooperative sector, officials said Wednesday.

Since the law does not mention big scale transactions, cheating through cooperatives has flourished, they said.

Speaking at an interaction, Deputy Registrar of the Department of Cooperative Bishnu Ghimire criticized cooperative movement activists for obstructing amendments to the Cooperative Act and regulations.

“Influential people in the sector are preventing the introduction of a new Cooperative Act which is expected to be tougher against wrongdoers,” said Ghimire.  “They fear that the new act could penalize them.”

According to the now dissolved high level commission formed to probe troubled cooperatives, they hold about Rs11 billion in public deposits.

The government has accorded priority to introducing a new cooperative act as part of its economic reforms plan.

Although the government has issued an ordinance on amending the existing act as a temporary solution, it is not being properly implemented.

Four years ago, the Department of Cooperative had prepared a set of standards for cooperatives, but it had a hard time trying to introduce the necessary directive as it could not be endorsed by the Cabinet.

According to the department, cooperatives are expected to operate under the self-regulation principle, but there has been no self-regulation which has led to problems.

Vice-President of the National Cooperative Association Min Raj Kandel said that cooperatives should also go for merger to reduce risks. Managing Director of National Cooperative Bank KB Upreti said that cooperatives had failed to maintain quality in operation despite the massive number of institutions operating in the market.

Source: ekantipur