Kathmandu, May 5
The government has announced that it will
begin returning the savings of depositors of troubled cooperatives from mid-May
(the first week of Jestha in the Nepali calendar).
The Problematic Cooperative Management
Committee, which started work on April 22, has collected the necessary details
of cooperatives and depositors and is preparing to refund the savings, the
Ministry of Land Management, Cooperatives and Poverty Alleviation informed.
According to the committee, around Rs. 46
billion must be returned to approximately 76,000 depositors of these troubled
cooperatives.
Most of them are small depositors. Those
with savings of less than Rs. 500,000 are classified as small depositors, while
those with more than Rs. 500,000 are considered large depositors. Out of the
total 76,000, only about 18,000 depositors have savings exceeding Rs. 500,000.
Minister for Land Management, Cooperatives
and Poverty Alleviation, Pratibha Rawal, said that much of the preparatory work
for the refunds has already been completed and the process will now begin.
“We have already completed a great deal of
work. We will prioritise returning funds to small depositors first,” she said.
The committee has also stated that it will adopt a policy of initiating the
refund process while giving priority to loan recovery.
As per the Procedures for the Establishment
and Operation of the Revolving Fund for Refund of Savings to Members of
Problematic Cooperatives 2083, the committee, by its own decision, may give
priority to small depositors. Among depositors, priority will be given to single
women, senior citizens over the age of sixty, Dalit and indigenous nationality
communities, and persons with disabilities.
The committee further announced that the
refund process for claim-submitting depositors will begin from the first week
of Jestha, while a second window for claims by those who missed the initial
process will open in the third week of May.
It also stated that funds allocated by the government
to the revolving fund will be used only as loans if the committee’s own fund
proves insufficient.
According to the Procedures, the revolving
fund will be created with the fund received from the government, reimbursement
sums returned by the relevant cooperative society, and sums received from other
sources.
Money recovered from the auction of assets
belonging to directors, audit committees, managers, loan sub-committees, and
individuals with authority or responsibility who were involved in the
embezzlement or misappropriation of the institution’s assets, savings, loans,
or shares, as well as any other sums recovered from such persons will also be
deposited into the fund.
"If the sale of assets proves
insufficient to refund the depositors, the Committee may also freeze and
auction assets that have been transferred or invested in companies by family
members of the individuals involved, whether such transfers occurred through
property partition, divorce, or any other means," according to the
Procedures.
Committee Member-Secretary Rabin Dhakal said
that strict legal measures will be adopted for loan recovery.
Managers, directors are last to be
refunded
The refunding of savings will be made on
the basis of the records, details received from the cooperative, or the balance
amounts shown in the computer system up to the day preceding the date on which
the cooperative institution was declared problematic.
However, depositors who have taken loans
from the cooperatives will get a refund after they have fully repaid the loans,
reads the Procedures.
Similarly, the savings of directors and
managers of the relevant institution, savings of members of their immediate
family, and individuals involved in embezzlement or misappropriation shall not
be refunded until the liabilities of depositors who have submitted claims have
been settled.
If the claim for refund of savings is
sub-judice in court, the process to refund the savings will not be started
until the case is settled.
However, if a depositor has savings in
multiple federal-level problematic cooperative organisations, he/she will get a
refund only from one such institution. If funds are insufficient, the Committee
is likely to distribute the remaining funds in the account on a pro-rata basis.
In the event of a depositor's death or if
they cannot be located, the savings will be refunded to their legal heir based
on evidence provided.
Sick pillar of economy
Although cooperative is mentioned in the
constitution as one of the pillars of the national economy, it remained
unregulated and unsupervised sector for the last seven decades. Mismanagement
and fund embezzlement in large and high-profile cooperatives were exposed in
the last one decade.
The government began to declare
cooperatives as 'problematic' since 2018. In 2024, a parliamentary probe found
that about Rs. 87.89 billion was misappropriated in at least 40 cooperatives.
They also had faked their audit reports and fabricated property divisions.
In January this year, the Supreme Court
ordered the government to return funds to small depositors – those with less
than Rs. 500,000.
On April 22, the government issued the
Procedures to operate the revolving fund. With President Ramchandra Paudel
ratifying the Cooperative (First Amendment Ordinance) last week, the government
can now use public funds for immediate repayment to victims.
Published in The Rising Nepal daily on 6 May 2026.
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