It has been found that borrowers from cooperatives are also suffering, alongside depositors who are protesting for not being able to retrieve their savings. Borrowers have fallen victim to cooperatives charging excessive interest, capitalizing on interest and imposing hefty penalties.
Tolraj Upadhyay, deputy registrar of the Department of Cooperatives, said that complaints regarding cooperatives charging higher-than-prescribed interest rates, imposing fines and damages, and auctioning mortgaged properties without following due process are being reported to the department. In an attempt to regulate interest rates, the department has mandated that cooperatives cannot charge more than 16 percent on loans as per the Cooperative Act.
Additionally, cooperatives are instructed not to capitalize interest. However, department inspections have revealed that many cooperatives are violating these guidelines by charging higher interest, capitalizing interest, and collecting money under the guise of fines and penalties.
An officer involved in monitoring stated that although cooperatives claim to charge 18-20 percent annual interest on loans, they collect more by offering short-term loans and frequently renewing them. Borrowers are also burdened with additional service charges and penalties. Upadhyay mentioned that if there is proof of interest being charged above the prescribed limit, the department will instruct the cooperatives to return the excess amount.
On Monday, the Parliamentary Special Committee, formed to investigate the misappropriation of savings in cooperatives, held discussions with creditors of three cooperatives. The committee questioned debtors including Kundan Aryal, Suresh Acharya, and Anantakant Mainali from Societal Savings and Loan Cooperative; singer Ramakrishna Dhakal, a debtor of Sri Laliguras Multipurpose; Sagar Bagale from Sumeru Cooperative; and Bidur Dhamala, a debtor from Kantipur Cooperative.
During the discussion, the borrowers expressed grievances, claiming that cooperatives were inflating debts by adding excessive interest, penalties, and damages. They also called for an investigation, alleging that the cooperatives had inflated their debts beyond what was actually owed. Surya Thapa, chairman of the Parliamentary Special Committee, stated that it was clear from the discussions that borrowers themselves are victims of cooperatives.
"Cooperatives are showing debts even after auctioning off borrowers' properties," he said. "Borrowers face greater difficulties when cooperatives add multiple fees to the loans."
The cooperatives have collected Rs 478 billion in deposits and issued loans worth Rs 405 billion. Despite the fact that cooperatives are supposed to operate solely among members, the government lacks data on how many members have actually been given loans.
