KATHMANDU: The Rastriya Swatantra Party had pledged in its election manifesto to return savings of small depositors within 100 days of forming the government. In line with that commitment, the government has amended the cooperative law through an ordinance and moved ahead with mechanisms aimed at refunding depositors.
The ordinance introduces a provision for establishing a revolving relief fund to facilitate immediate repayment to members of troubled cooperatives.
According to the amended provision, the fund may include allocations from the government, reimbursed amounts recovered from concerned cooperatives, and other available sources. The ordinance also states that money provided by the government to the management committee must gradually be reimbursed through recovery of movable and immovable assets and other sources linked to debtors of problematic cooperatives.
The government has already provided Rs 250 million as a loan to the fund to begin repayment to small depositors. However, the ordinance does not mention whether interest on the government loan must be repaid.
At present, the Office of the Problematic Cooperative Management Committee is handling management procedures for 23 troubled cooperatives under the federal government. Despite years of operation, the committee has yet to fully resolve the crisis of even a single cooperative.
According to the committee’s latest data, 62,760 depositors from 23 cooperatives have claimed savings totaling Rs 39.93 billion. Since beginning management efforts in fiscal year 2017/18, the committee has returned only 2.09 percent of the claimed deposits, raising concerns about its effectiveness.
Minister for Land Management, Cooperatives and Poverty Alleviation Pratibha Rawal has said the government will act aggressively not only in returning deposits but also in recovering loans. Speaking at a recent press conference, she warned that the government could even restrict public services for defaulters if necessary.
“We are equally focused on recovering loans while returning savings,” she said, adding that measures related to electricity, water supply, and waste management services could be considered against those unwilling to repay.
Since the formation of the government led by Prime Minister Balendra Shah, the committee has also begun publishing the names of major cooperative loan defaulters in an effort to improve recoveries.
Experts call move positive, but caution against waiver culture
Former governor of Nepal Rastra Bank Dipendra Bahadur Chhetri said the government’s decision to provide reimbursable financial support to address the cooperative crisis was a positive step.
However, he warned that if the loan were later converted into a waiver, it would raise serious questions about the government’s intent.
He recalled that during the tenure of former finance minister Baburam Bhattarai under the government led by Pushpa Kamal Dahal, agricultural loans of up to Rs 30,000 had been waived through state funding, which he said encouraged a culture of non-payment.
Chhetri stressed that priority should be given to recovering money from those who borrowed from cooperatives.
Similarly, former banker and analyst Nar Bahadur Thapa described the government’s decision to provide loan support to the management committee as a constructive move.
“It appears the government is genuinely trying to solve the problem rather than simply prolonging it,” he said.
Thapa added that once depositors are compensated using state-backed funds, borrowers who misused cooperative money would face stronger pressure to repay their loans.
“This is a positive step toward resolving the cooperative crisis,” he said. “The government appears serious about solving the issue rather than leaving it unresolved indefinitely.”
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