Fifteen years ago, Chori Maya Shrestha from Asan deposited proceeds from a house sale into Luniva Savings and Credit Cooperative in 2009. By 2010, the cooperative began facing problems, ceasing to return deposits to its members. Since then, Shrestha has frequently visited police stations, the Department of Cooperatives, and the Problematic Cooperative Management Committee in attempts to retrieve her savings. Finally, on Tuesday, she managed to recover her funds.
Similarly, Radha Krishna Rajbhandari, another depositor with Luniva Savings and Credit Cooperative, received Rs 82,132 back on Tuesday. He expressed frustration over the decade of visits to various government agencies to reclaim his money.
These cases are representative of thousands of individuals who, under the promise of savings security, deposited money in cooperatives but now face difficulties in accessing their funds. Despite efforts ranging from street protests to appeals with police and courts, many depositors have not yet recovered their savings.
The government designates cooperatives that cannot return savings as “problematic” and assigns the Problematic Cooperative Management Committee to oversee their assets and liabilities. However, delays due to the committee’s limited capacity and bureaucratic hurdles have forced depositors to wait extended periods for their funds. Committee Chairman Sriman Kumar Gautam admitted that constraints in both manpower and legal processes have slowed their work but assured that efforts to increase staff capacity would speed up operations.
At a press conference on Tuesday, Gautam announced a plan to expand the committee with 16 additional personnel and said they aim to resolve 50 percent of pending cases in the near future.
According to the Cooperatives Act, 2017, the government can declare cooperatives unable to return member savings as "problematic" based on recommendations from the registrar at the Department of Cooperatives and then appoint a management committee to handle their assets and liabilities. Acting on this provision, the federal government formed the Problem Cooperative Management Committee on January 13, 2018. Although 22 cooperatives have been designated problematic and placed under the committee’s oversight, only three have seen substantial progress in liability management.
The committee reports that out of claims totaling Rs 39.93 billion, only Rs 1.51 billion has been returned till date, benefiting just 6,155 of the 62,760 claimants. A recent parliamentary inquiry into the misuse of cooperative savings revealed that 22 cooperatives declared as problematic and 40 others under investigation hold liabilities amounting to Rs 87.82 billion. Official and unofficial data suggest that over 500 cooperatives nationwide are currently unable to return savings, with outstanding liabilities exceeding Rs 200 billion.
Amid ongoing protests, depositors from over 300 cooperatives have united under the “Depositors Protection National Federation.” Although the government has reached agreements with the federation three times, frustrations remain as the issue persists. In response to complaints, the government has been investigating cooperatives unable to repay savings, involving law enforcement, taking legal action, or transferring their management to the Problematic Cooperative Management Committee. The committee attempts to sell the cooperatives’ assets to fulfill depositor claims.
A parliamentary committee report concluded that neither the current legal measures nor the Problematic Cooperative Management Committee are sufficient to guarantee full repayment to depositors. The report advised the government to freeze bank accounts and passports of cooperatives’ directors and offer them a timeline to resolve their cooperatives' financial issues, noting that imprisoning directors may hinder justice for depositors. It also suggested that deposits up to Rs 500,000 be returned through government-guaranteed bonds.
The report further recommended establishing a dedicated management group for each troubled cooperative to expedite resolutions. However, the government instead plans to expand the capacity of the current committee to manage all problematic cooperatives.
On Tuesday, Balaram Adhikari, Minister for Land Management, Cooperatives, and Poverty Alleviation, said that long-term solutions, including establishing a second-level regulator, a credit information center, a debt recovery tribunal, and a savings and credit protection fund, are being developed to address cooperative sector issues.
