Cooperative problem in Nepal: Expected to be solved before becoming chronic

Recently, an agreement has been reached between the agitating cooperative savers and the government. An eight-point-agreement has been reached between the victim side and the government negotiation team, including the formation of an empowered committee and the immediate return of the savers' money. After the agreement, the victims postponed the protest program. In the presence of the Minister of Cooperatives, it is mentioned that the business of troubled cooperatives will be examined.

According to the registrar of the cooperative department, it has also been agreed to strengthen the institutional capacity of the troubled cooperative management committee, including manpower, resources, and management of the property and liabilities of the troubled cooperative, and to promptly complete the action of returning the savings.

Likewise, it has been agreed to establish a Savings and Credit Protection Fund, a Credit Information Center, and a Debt Recovery Tribunal to bring the offending cooperative directors, managers, and employees under the scope of immediate action and to immediately implement the suggestions given by the Cooperative Sector Reform Task Force.

Now we have to see how effective its implementation will be. Let's hope it will be a positive inspection, monitoring, and account checking of the cooperative organizations requested by the struggling victims and currently facing problems.

It has also been agreed to form an independent, empowered committee with the representation of the victims and struggling savers to make a recommendation to the government with detailed information in case such cooperatives are to be declared problematic by identifying the cooperatives that are in trouble.

In the past, with the liquidity in the banking sector, due to the economic recession and the decreasing trade deficit in various industries and businesses in the grip of the economic recession, its impact has also affected many financial sectors, especially in the cooperative sector.

The common meaning of co-operative means cooperation, coexistence, and working together. In this way, the collective effort made to raise their economic, social and cultural status by working together is called cooperative.

The ancient cooperative started with Eastern philosophy. Things like “Ainchopaicho, Ormaparm, Mardako Malami Jeeundako Janti“are forms of cooperatives. A cooperative society is a form of organization in which individuals voluntarily work together as human beings based on equality for the promotion of their economic interests. A cooperative is a movement to helplessness against the exploitation of capitalism, it is a joint effort of all, not just one. Actually, cooperatives are non-profit organizations, their basic objective is to uplift the economic welfare of people from lower social strata.

From this perspective, cooperatives are social rather than commercial organizations. However, cooperatives in Nepal are run as commercial organizations.

They collect deposits and invest in loans. If they mobilize deposits and invest judiciously in credit, there is no problem. But there may be problems when you invest recklessly in loans and most of the loans are not repaid on time. It seems that NEFSKUN is demanding to bring a law quickly to make the cooperative sector more orderly. The concept of the Stabilization Fund has been embodied in the cooperative sector of Nepal. In Nepal's new Cooperative Act, 2074, a provision has been made regarding Stabilization

Fund.

In Nepal, co-operatives have invested in real estate and margin loans in the past. Cooperatives are in crisis when both of these sectors are at a standstill.

According to the Cooperative Act of 2017, cooperatives are under the cooperative department, state government and local government. Despite this arrangement, proper monitoring of cooperatives has not been done. There are irregularities in some cooperatives. Not all cooperatives are bad. But due to the generalization that all cooperatives are untrustworthy, people have lost faith. If we analyze the cooperative sector of Nepal by focusing on the recent challenges and opportunities, cooperatives play an important role in the socio-economic development of Nepal, but they also face special problems.

Here's an overview: Community-based cooperatives are community-owned and managed organizations that promote local participation and empowerment.

A wide range of services

Nepali cooperatives provide savings, loans, insurance, and nonfinancial services. Since the Cooperatives Act of 1992, cooperatives have grown independently, reaching over 26,500. Visionary leaders within cooperatives motivate members and drive growth. Technical skills gap Rural cooperatives struggle due to low technical and professional skills in poor and remote communities. Weak governance and management hinder the effectiveness of cooperatives. Some members remain inactive, which affects overall performance. Strengthening cooperatives can significantly improve financial access and welfare of members. Nepal's diverse agricultural climate, rich biodiversity and export potential provide opportunities for agribusiness entrepreneurship. Continuous support is needed for capacity building, especially in rural areas.

Some cooperatives fail due to fraud or mismanagement. Some even have a political nexus. Political interference can affect cooperative stability. Failure to meet financial obligations affects cooperative viability. In short, cooperatives can be key players in Nepal's development if they are strong and strategically managed.

Visionary leadership, capacity building, and addressing vulnerabilities are critical to their sustainable development. Cooperatives are considered a pillar of the national economy. They have the ability to raise the standard of living of the rural people. Loans provided by such organizations can be taken as a means of livelihood for lowincome rural people as they can engage in their profession.

The interest charged on such a loan is lower than the loan taken from a moneylender. Therefore, the government and related regulatory bodies should take concrete steps for the promotion and strengthening of cooperatives.

Nepal has a long cultural tradition of informal communitybased cooperatives, including savings and loan associations, known as “dhikuti”, and grain savings and labor exchange systems, traditionally known as “dharma bhakiri”. Similarly, a cursory review of history shows that Guthi provided a forum for the smooth running of various sociocultural practices. Many of these traditional support systems are still in operation in rural areas of Nepal.

The first Co-operative Act was enacted by the government in 1960, which was followed by the Agricultural Cooperative Act (Joint Co-operative) in 1963 which transformed into the Capital Co-operative Bank of Savings and Loan Co-operative in 1968 it was also transformed into the Agricultural Development Bank (ADBN).

And in 1975 the Cooperative Act was again amended. The Co-operative Act was amended for the third time to give the government more control. By this time the savings and loan movement had spread across the country and the need for a top-level coordinating body was evident.

The Nepali cooperative movement has seen many socio-economic as well as political changes. In 2008, Nepal was declared as the Federal Democratic Republic of Nepal. In 2015, the Constituent Assembly successfully promulgated a new constitution of Nepal that recognized the cooperative sector as one of the three pillars of the national economy. In 2018 and 2019, new cooperative laws and regulations were implemented. The new constitution decentralizes and empowers local and state governments to enact laws and act as they see fit.

Now state governments and local level government bodies can promulgate and enforce co-operative laws. According to the Department of Cooperatives, the main types of cooperatives operating in Nepal are savings and credit, multipurpose, dairy, agriculture, fruits and vegetables, beekeeping,