August 16: The 'Cooperative Sector Improvement Suggestion Task Force' is preparing a blueprint to form a second level regulatory body for monitoring cooperatives. The task force is mandated to submit suggestions along with the cooperative sector reform plan to the regulatory body.

A member of the task force informed New Business Age that the term of the task force expired on August 11.

 “We prepared a report with suggestions for the reform of the cooperative sector. The submission of the report has been delayed because of the delay in finalizing the Second Tier Institution (STI) framework.” 

The task force is discussing the options of developing the capacity of the Department of Cooperatives, assigning responsibility to the National Cooperative Development Board or forming a regulator under the Nepal Rastra Bank.

Since the rights of the cooperatives have been transferred to the local level, the task force is in favor of delegating an authorized regulator rather than handing the responsibility to the federal government. After the task force recommends STI, the government will make a law accordingly.

The government had announced while unveiling the budget for the current fiscal year that it will establish a specialized regulatory body to effectively regulate and supervise the cooperatives dealing in savings and loans.

In the new federal system, the right to register and monitor cooperatives has been delegated to the municipality. However, due to the lack of skilled manpower and infrastructure in those agencies, the regulation of cooperatives has become more chaotic. The government does not even have the details of the business of the cooperatives.

Due to ineffective regulation of cooperatives, savings in such organizations are at risk. When some cooperatives could not return the savings of their members, the depositors started a movement against the cooperatives. After that, the government on May 6 formed the task force to identify the problems and suggest solutions. The task force was initially given a deadline of 2 months. After the task force was able to submit only the preliminary report on July 11, the deadline was extended by 1 month.

The task force comprises of a member of the National Planning Commission, who overlooks the cooperatives sector, Jayakant Raut, the secretary of the Ministry of Land Management, Cooperatives and Poverty Alleviation, the chairman of the troubled cooperative management committee, the joint secretary of the Ministry of Cooperatives, Finance, representatives from the Women, Children and Senior Citizens and the National Planning Commission, a director of Nepal Rastra Bank, senior police officers of the Central Investigation Bureau of Nepal Police. Chairman of the National Cooperative Federation is also a member of the task force. Similarly, the task force also has two experts and a financial analyst as its members.

The government reached an understanding with the victims of the cooperative to address their problems and refund the money of the depositors based on the suggestions of the task force.