A high-level committee formed recently to take over Oriental Cooperatives, assess assets and liabilities of troubled savings and credit cooperatives, and compensate depositors will start its work within a week. 

The Problematic Institutions Management Committee was formed by the Ministry of Cooperatives and Poverty Alleviation upon getting a green signal from the Cabinet in mid-January.

The seven-member committee is led by former judge Gauri Bahadur Karki. Other members of the committee are Kashi Nath Marasini, former official of the Department of Cooperatives, Lumba Prasad Panthi, former official of the Nepal Rastra Bank, and Deepak Poudel and Govinda Bahadur Malla, who are associated with cooperatives movement in Nepal.

The ministry has also appointed Rewati Pokhrel, undersecretary at the Ministry of Cooperatives, as the member secretary of the committee. The committee, however, is still short of one member. The position has been set aside for a representative of the National Cooperatives Federation, which is yet to nominate a candidate.

“The committee is still in the process of setting up an office,” said Karki, the head of the committee, who had previously led a high-level commission to launch inquiry into malpractices of savings and credit cooperatives in 2013. “We will complete this process within a week and formally begin our work.”

The committee will initially focus on management of liabilities of now-defunct Oriental Cooperative. To conduct this task, the committee will take over the savings and credit cooperative; evaluate the entity’s assets; and address problems of victims who lost money. The committee will then look into the health of around 130 cooperatives that have been categorised as troubled.

This initiative taken by the government has raised hopes among hundreds of depositors for recovery of billions of rupees that they had lost after at least 155 cooperatives faced a financial crisis in 2013.

The financial health of these cooperatives had deteriorated because of unsound lending practices, exposure to the real-estate market and involvement of promoters in embezzlement.

The biggest loser at that time was Oriental Cooperative, whose depositors lost at least Rs5.2 billion. The cooperative had gone bust after its key promoter, Sudhir Basnet, illegally invested depositors’ money in the real-estate market, which later crashed.

At that time when the cooperative went bust, it was also selling apartments and housing units via Oriental Builders and Developers, which was involved in development of over half a dozen housing

and apartment projects in the Kathmandu Valley, including Oriental Colony, Chakrapath Heights at Basundhara, Dhumbarahi Apartments Phase 2, Bagmati Apartment at Sankhamul, Eastern Apartment at Kausaltar, Vegas City at Balkumari, Imperial Apartment at Naxal and Sanepa Height Apartment, among others.

Many people who had bought apartments from Oriental Builders and Developers and companies affiliated to it had complained that the firm had collected advance payment from them but failed to deliver the units.

“We will look into all these cases and try to compensate depositors and real-estate owners,” said Karki.