May 1: Operators of cooperatives have asked for financial assistance from the government in the form of concessional loans of Rs 10 billion as they are under mounting pressure due to lack of liquidity.

As the return on savings is more than the deposit collection and loan recovery, some cooperatives have reached a situation where they are unable to return even the savings of their members. Stating that this has had a negative impact on the entire cooperative campaign, the National Cooperative Federation, the umbrella body of cooperatives, has requested loan assistance from the government at a concessional interest rate.

The federation held a press conference and presented a 13-point demand to the government to solve the problems of the cooperatives sector. In the demand letter, the federation has urged for a concessional loan of Rs 10 billion to bail out the cooperatives.

The federation has demanded that the Ministry of Home Affairs should immediately issue circulars to all 77 district administration offices to allow the cooperatives to operate smoothly, make arrangements to freeze the property of debtors, give time until mid-July for tax payment, announce a package of cooperative integration, remove the limit of individual savings of Rs 2.5 million, cancel the reference interest rate and arrange automatic interest rate, announce a cooling period of two years.

They also demanded that credit information center, debt recovery tribunal, as well as savings and credit protection fund should be established immediately and a second level regulatory body should be formed. Other demands include registration of cooperatives, expansion of scope of work, and end to discrepancies of service centers.

Om Devi Malla, senior vice president of the federation and coordinator of the Problem Solving Coordination Committee said that the demand letter has be submitted to the Ministry of Cooperatives, all districts and provinces by April 30 and if the government fails to fulfill their demands, they will go on strike from May 1.

Although the problem of liquidity in banks and financial institutions has been almost resolved, the problems faced by the cooperatives have been increasing. The crisis faced by a handful of cooperatives is having a ripple effect on the entire cooperative sector as people have stated to doubt the cooperatives which in turn might be detrimental to the future of the cooperative sector.

The government officials are saying that the problem of liquidity has arisen because the cooperatives have indiscriminately invested in unproductive sectors including real estate. The monitoring and reporting of cooperatives has not been possible because the cooperatives now fall under the jurisdiction of the provincial and local levels.

Due to this, even the government does not have actual information about the condition of cooperatives. The Department of Cooperatives of the federal government has proposed to form a study task force to solve the problem. It is said that the proposal of the department has been forwarded to the ministry where it is gathering dust.