Troubled Cooperative Returns Savings to Small Depositors While Clamping Down on Large Debtors

April 22, Kathmandu – The Office of the Distressed Cooperative Management Committee is preparing to begin refunding savings to small depositors starting the first week of Jestha. The office plans to refund savings without exceeding 50% of each small depositor’s total amount.

The government intends to refund savings from funds provided by the government and from recovered amounts collected by the troubled institution. Loan recovery is given the highest priority before focusing on returning depositors’ savings. Minister for Land Management, Cooperatives, and Poverty Alleviation, Pratibha Rawal, emphasized ensuring fairness to all depositors, large and small, by making sure no depositor is neglected during the refund process.

“The government is committed to resolving cooperative issues, focusing on loan recovery and the repayment of depositors’ savings,” Minister Rawal stated. She added that the refund process will advance only after loan recovery is complete.

The government has granted a 15-day period for the directors, employees, and borrowers of distressed cooperatives to repay their loans and cooperate with the committee. Minister Rawal also mentioned plans to publicly disclose the names of defaulters.

In cases where loans are not repaid, strict measures will be taken including suspending public services, blacklisting, investigations in cooperation with police and the National Investigation Department, and initiating legal action based on the committee’s recommendation. “Refunding of savings will begin from the first week of Jestha,” the minister confirmed.

Dilli Raj Acharya, Chairman of the Distressed Cooperative Management Committee, informed that starting from the first week of Jestha, savings will be returned to depositors with amounts of NPR 10,000 or less, and arrangements are in place to refund up to NPR 50,000 for small depositors.

Govind Prasad Rizal, Joint Secretary at the ministry, said efforts are ongoing to make the refund process efficient, straightforward, and swift. Records have been compiled for 76,444 depositors from 20 distressed cooperatives that have contacted the committee.

Among them, 58,141 depositors have savings up to NPR 500,000, while only 18,000 have savings exceeding that amount. The total savings in these troubled cooperatives amount to NPR 4.505 billion.

The total savings of small depositors reach approximately NPR 666 million. There are 36,522 depositors with savings up to NPR 100,000, totaling about NPR 135 million.

Similarly, those with savings up to NPR 500,000 hold a combined total of NPR 531 million. Out of these, 17,000 depositors have savings under NPR 25,000, and 9,000 depositors hold up to NPR 50,000, collectively amounting to NPR 58 million.

To address misappropriation and irregularities, the Cooperative Act has been amended to identify and strictly prosecute individuals involved. The amendment allows legal action not only against individuals but also their families, relatives, and employees implicated in mismanagement of cooperative funds.

Chairman Acharya reiterated that his team is focused on loan recovery first and aims to begin refunding small depositors’ amounts from the first week of Jestha.

The committee currently holds NPR 25 million released by the government to the revolving fund for savings refunds, along with about NPR 35 million recovered from distressed cooperatives.

Using these funds, the committee will commence refunding savings starting the first week of Jestha. The government has amended the Cooperative Act through an ordinance, empowering provincial and local governments to declare cooperatives as distressed, facilitate savings refunds, establish revolving funds, and execute loan recovery.