June 1: The department of cooperatives has instructed cooperatives to make public the real situation of the organization through a white paper. Stating that the general public has developed a negative outlook towards cooperatives in general due to the inability of some organizations to return their savings, the department asked them to publish a white paper to take the people in confidence.

The department’s Registrar Namraj Ghimire said at a press conference on Friday that cooperatives have invested in real estate, shares as well as subsidiary companies.

“The the reality should be informed through a white paper. After that, if they make a commitment to return the depositors money with a deadline, we will also facilitate it,” he said.

The cooperative operators submitted a memorandum to the government through the National Cooperative Federation (NCF) and demanded the implementation of credit information center, debt recovery tribunal, cooperative promotion fund, savings and loan protection fund as well as Rs 10 billion concessional loan from the cooperative bank to solve the problem. After they protested that their demands were not met, the department held a press conference and announced its views.

 “The department will not hesitate to take any action from freezing the assets of the co-operative operators who have committed fraud to bringing them under the ambit of the law to taking any legal action for the return of the depositors’ savings. The department is always alert to implement the provisions of other prevailing laws including the Cooperative Act, 2074, Cooperative Regulations, 2075 for guaranteeing the safety and return of savers' savings and shares,” Ghimire said.

The department concluded that after problems arose due to the weakness of institutional governance in some cooperatives, news and perceptions that the savings in the cooperatives are not safe came out and created an atmosphere of mistrust among the general public. In the current situation, the directors should increase contact with their members and build an atmosphere of trust.

According to the provisions of the constitution, the authority from co-operative registration to regulation has been given to the local level and the state government. Since the provincial and local levels are unable to regulate cooperatives, the management of cooperatives has become chaotic. The government does not even have the statistics of the business of cooperatives in recent times.

Taking advantage of the weak regulation, cooperatives that invested in real estate, private companies and shares against the law are in crisis as they are unable to return their savings due to the reduction in business due to the covid-19 pandemic, the Russia-Ukraine war, the government's crackdown on real estate auctions, as well as the tight monetary policy.