NRB proposes 5-point plan to address troubled cooperatives' issues

KATHMANDU: Nepal Rastra Bank (NRB) has put forth five-point suggestions to address the problems of troubled financial cooperatives. 

During today’s meeting of the parliamentary probe special committee, which has been formed to investigate the misuse of depositors’ savings in financial cooperatives, NRB Governor Maha Prasad Adhikari emphasised that the cooperative sector’s issues could be resolved by following these five key suggestions. Governor Adhikari proposed a phased approach for returning depositors’ savings. Specifically, he recommended that savings up to Rs 100,000 should be returned in the first phase, while amounts up to Rs 500,000 should be addressed in the second phase, and any savings exceeding Rs 500,000 should be handled in the third phase.

The central bank has also proposed the formation of a dedicated group to address these problems and to adopt measures similar to those used in resolving issues with problematic banks.

Governor Adhikari further advised that arrangements should be made for cooperatives that operate without geographical restrictions.

Anil Chandra Adhikari, Chief Executive Officer of the Credit Information Bureau, suggested implementing an integrated Information System at the Bureau. Additionally, the meeting discussed the establishment of a separate information bureau to address insurance and cooperative-related matters.

Sunil KC, President of the Nepal Bankers' Association, highlighted the need for prompt resolution of problems that may arise in other financial institutions, similar to those faced by cooperatives.

Jay Kanta Raut, Coordinator of the erstwhile cooperative suggestion taskforce, explained that the cooperative sector's problems are increasing due to inadequate implementation of the suggested measures. Many financial cooperatives are operating contrary to cooperative norms, values, and principles, leading to difficulties.

Experts emphasised the importance of establishing a Credit Recovery Tribunal specifically for the financial cooperatives sector.

During the meeting, chairperson of the Special Committee, Surya Bahadur Thapa, clarified that the committee has not yet discussed whether the government should compensate depositors affected by troubled cooperatives. However, the primary focus remains on fulfilling the main responsibility of cooperatives: returning depositors' savings.

For tomorrow's meeting, officers who previously served as registrars in the Cooperative Department after 2048 BS have been invited. Additionally, discussions will be held with victims of financial cooperatives in separate sessions.

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