February 25: Nepal Rastra Bank has agreed to monitor the cooperatives which falls under the jurisdiction of the Department of Cooperatives. The central bank has sent three experts to the department for the monitoring of cooperatives upon the request from the Ministry of Land Management, Cooperatives and Poverty Alleviation.

In order to provide technical assistance in monitoring of cooperatives, the NRB has sent Deputy Director Dr Ramesh Chaulagai, Director Ram Krishna Rai and Ramesh Poudel of Microfinance Department to the Department of Cooperatives.

Spokesperson for the Department of Cooperatives, Tolraj Upadhyay, informed New Business Age that they will participate in the monitoring committee to be formed under the coordination of the deputy registrar of the department.

"Nepal Rastra Bank has sent three employees to monitor the cooperatives," said Upadhyay, "We will form a monitoring team with them and start work."

Earlier in 2066, Nepal Rastra Bank had sent two employees to the department to monitor the cooperatives. Recently, the number of problematic cooperatives has increased and the central bank has again assisted in the monitoring.

In the Cooperatives Act, there is a provision for the central bank to monitor the cooperatives with an annual turnover of more than Rs 500 million. However, the central bank has not shown any interest in monitoring the cooperatives as there is no such provision in the Nepal Rastra Bank Act.

According to the provisions of the constitution, the local level has been authorised to register and regulate the cooperatives based on the area of operation of those cooperatives.

Currently, cooperatives are being regulated by the Department of Cooperative of the federal government as well as the state and local levels. However, after the transfer of cooperatives to the provincial and local levels, their regulation has weakened. As a result, in the recent past, there have been increasing incidents of misappropriation of the savings of the cooperatives, directors being out of contact and the depositors not getting back their savings.

To solve the problems seen in the cooperatives, the government had formed a task force under the coordination of National Planning Commission’s member Dr Jayakant Raut.

A report submitted by the committee to Prime Minister Pushpa Kamal Dahal about six months ago had recommended that Nepal Rastra Bank should monitor the cooperatives with large transactions.

The committee had also suggested forming a second-level regulatory body for monitoring cooperatives, classifying cooperatives based on their problems, forming a credit information center, and a debt recovery tribunal, but the government has not implemented those suggestions.