KATHMANDU: Despite the rising number of problematic cooperatives, the government has not been able to effectively mobilize the Cooperative Promotion Fund, which was set up by the government to promote cooperative businesses.

The Ministry of Land Management, Cooperatives, and Poverty Alleviation had established the fund in 2077 BS in accordance with the Cooperative Act 2074.

Due to the government’s failure to effectively mobilize the fund, the cooperatives have stopped contributing to the fund. As a result, even the accumulated amount remains unutilized.

The Auditor General's 61st annual report highlights that most of the cooperatives operational in the country have not deposited funds into the Cooperative Promotion Fund, and the government lacks detailed records of those that have deposited the amount. There are more than 31,000 registered cooperatives in the country.

The report criticizes the Fund for not maintaining the details of the amount collected so far. It mentions that the Fund has only kept records of bank statement which shows the total amount of money deposited in the Fund.

The Auditor General’s report has instructed the effective mobilization of the collected funds.

Despite previous reports urging the government to mobilize these funds, the government has yet to take any action. The Cooperative Act mandates that organizations deposit 0.5 percent of their surplus into the Cooperative Promotion Fund after allocating profit to the reserve fund. Additionally, the Cooperative Regulations 2075 specify a committee, coordinated by the Minister of Cooperatives, to distribute the funds.

This committee includes the deputy chairman of the National Cooperative Development Board, secretary of the Cooperative Ministry, joint secretary of the Ministry of Finance, the chairman of the Cooperative Federation, the chairman of the Central Savings and Credit Cooperative Association, and the registrar of the Department of Cooperatives.

According to the regulations, at least 75 percent of the fund must be invested in cooperative business infrastructure, with the remainder spent on business promotion, education, information, training, market promotion, and monitoring. The affiliated associations are required to maintain separate records of the received funds, audit them according to prevailing laws, and make the details public.

National Cooperative Federation’s President Om Devi Malla expressed frustration, stating that the government is not interested in mobilizing the funds. "We have been urging the ministry to utilize the collected funds, but no action has been taken so far," Malla said.

Gokarnamani Duwadi, secretary of the Ministry of Land Management, Cooperatives, and Poverty Alleviation, acknowledged the difficulty in deciding on mobilizing the money due to the lack of detailed records of the Fund.

"We have no problem mobilizing the money according to the legal system," Duwadi said, "But we need detailed information about the organizations contributing to the fund."

Additionally, the establishment of cooperative promotion funds by provincial and local governments has further halted contributions to the federal fund. According to the constitution, the authority to register and regulate cooperatives rests with the local level. Consequently, cooperatives have started depositing funds into the accounts of their respective regulatory bodies instead of the federal government's fund.