Print Edition - 2015-07-09 | MONEY
Funds to be established to safeguard deposits
Jul 8, 2015-
The government is planning to form a Cooperative Savings Safety Fund and Cooperative Loan Investment Fund to protect the deposits held by cooperatives, according to the policies and programmes for the fiscal year 2015-16 announced on Wednesday.
The move is in line with the recommendation of a high-level commission led by former Special Court Chairman Gauri Bahadur Karki. The commission, which has since been dissolved, had urged the government to form high-powered rehabilitation commission with the authority to confiscate the property of cooperative directors embezzling the public’s money. A study conducted by the commission found that 130 troubled cooperatives had misappropriated more than Rs11 billion of over 12,000 depositors.
Three months ago, the government had amended Cooperative Act 1992 with the aim of inserting provisions for the formation of a rehabilitation commission and a seven-year jail term for operators of cooperatives convicted of fraud. However, the provision has hardly been implemented.
Suresh Pradhan, joint secretary at the Ministry of Cooperatives and Poverty Alleviation, said the government had envisioned creating the funds to safeguard the people’s money in line with the recommendation made by the commission. “The proposed funds will provide compensation up to Rs200,000 to depositors,” he said, adding the funds would work in the same modality as a deposit guarantee fund. According to him, the ministry has started devising the working guideline to operate the fund.
Regarding the establishment of the rehabilitation commission, Pradhan said that there was almost no progress on the matter. The ministry is also making preparations to introduce a new cooperative act. “If the new act is endorsed, it could come up with a relief package for the affected people.”
In addition, the government’s policies and programmes has also announced fixing the ceiling of savings and loans for financial cooperatives besides promoting productive cooperatives. There are more than 30,000 cooperatives operating across the country, and the government has planned to promote mergers among them to reduce their number.
Bishnu Ghimire, under-secretary at the Department of Cooperatives, said the department had formed a merger plan three years ago. According to him, the government is likely to introduce tax incentives to merged cooperatives through its upcoming budget.
Many cooperatives have become interested in merging, and the department has targeted combining 400 cooperatives next fiscal year, said Ghimire.
The government also plans to launch a scheme entitled “One family, one cooperative member”. Ghimire said the scheme would help community households to improve their living standards through productive businesses promoted by cooperatives.
Published: 09-07-2015 08:08