Co-ops hit by the country’s worsening economic conditions, increasing number facing financial problems

December 21, 2022, 11:33:09 AM |

KATHMANDU: A growing number of cooperatives have started landing in financial crisis in recent days due to slump in the realty business, rising inflation and liquidity crisis in the banking system.

In a number of cases, directors of savings and credit cooperatives in particular, have gone out of contact after they were unable to pay back the money of their depositors. Similarly, a number of cooperatives have been kept in blacklists by the Credit Information Bureau (CIB) Nepal after these cooperatives failed to clear their outstanding dues with the banks.

According to the CIB Nepal, it blacklisted nine cooperatives in the past one month. Lalupate Multipurpose Cooperative, Smriti Savings and Credit Cooperative, Pathivara Savings and Credit Cooperative, Mega Dream Multipurpose Cooperative, Siddhartha Multipurpose Cooperative, Punya Bhumi Savings and Credit Cooperative, Astha Savings and Credit Cooperative, Uttam Savings and Credit Cooperative and Pashupati Savings and Credit Cooperative were among the cooperatives that landed in trouble.

Likewise, directors of many cooperatives have been found swindling the money deposited by the members. Last week, the officials of Sunaulo Diyalo Savings and Credit Cooperative in Indrachok, Kathmandu, went out of contact, while its depositors filed complaints at the Department of Cooperatives in the Kathmandu Metropolitan City demanding recovery of Rs 400 million.

Likewise, Asta Savings and Credit Cooperative in New Road, Kathmandu, has also faced a similar predicament. Two weeks ago, 35 depositors filed complaints to recover Rs 6 million from the cooperative, after the cooperative operators went out of contact.

A few months ago, Gautam Shree Multipurpose Cooperative in Kuleshwar, Kathmandu faced similar financial problems. The cooperative has been accused of not returning over Rs 1.75 billion of over 1,100 depositors.

Devendra Poudel, director at the cooperatives unit of the Kathmandu Metropolitan City (KMC), said many cooperatives landed in trouble due to their excess investment in real estate and shares market. According to him, cooperatives were unable to return the money of the depositors after transactions in both of these sectors crumbled.

With growing cases of misconduct by the primary cooperatives, the regulators have been receiving an increasing number of complaints. The records with the KMC show that it registered complaints against six cooperatives accused of embezzling more than Rs 40 million deposited by their members in the first four months of the current fiscal year.

Fiscal Nepal |

Wednesday December 21, 2022, 11:33:09 AM |