The government’s plan to return the savings of common people stuck in problematic cooperatives has become uncertain. In the current fiscal year’s (FY 2024/25) budget, the government promised to return savings of up to Rs 500,000 to depositors per family from the cooperatives labeled as problematic. However, there has been no progress in implementing this measure.
During a press conference to mark 100 days of the formation of the new government, Minister for Land Management, Cooperatives, and Poverty Alleviation Balaram Adhikari suggested the plan may not be feasible. He indicated that returning savings from troubled cooperatives is challenging due to the lack of assets or collateral.
“The process of lending money to problematic cooperatives is complicated as they lack adequate assets or mortgages,” he said.
On March 19, the ruling coalition announced to prioritize offering short-term refinancing for cooperatives by property mortgages. The budget included provisions to refund savings of up to Rs 500,000 in line with this commitment. However, complications have emerged following the arrest of former Deputy Prime Minister and Home Minister Ravi Lamichhane, a key planner, on cooperative fraud charges. Nepal Rastra Bank (NRB) has also expressed reservations, with an official stating, “Refinancing these cooperatives complicates loan recovery.”
The special parliamentary committee formed to probe misuse of cooperative funds recently reported the lack of progress in returning depositors’ funds. After reviewing the details of 22 cooperatives declared as problematic and 40 others under scrutiny, the committee found they owed a total of Rs 87.82 billion against assets valued at Rs 82.32 billion, including loan investments. The report cited issues in loan recovery due to due to loan investment in non-banking assets.
Depositors' claims from cooperatives marked problematic by the federal government are estimated to total approximately Rs 50 billion. Data indicates that over 500 cooperatives nationwide are financially troubled, with a combined Rs 200 billion of public savings unrecovered. Members from more than 300 organizations, protesting under the National Cooperative Federation of Nepal (NCF), have been demanding the return of their savings. While these protests began in March, they were paused following a third agreement with the government in August.
Minister Adhikari also announced plans to establish a separate authority to monitor cooperatives, alongside mechanisms such as a credit information center, debt recovery tribunal, and deposit and credit protection for cooperatives. He claimed that all cooperative-related issues would be resolved within a year.
Rupandehi District Court Approves Arrest of Ravi Lamichhane
The Rupandehi District Court has authorized the police to arrest Ravi Lamichhane, chairman of Rastriya Swatantra Party (RSP), on charges of misappropriating cooperative funds. The Kaski District Court also extended Lamichhane’s custody by seven days for further investigation.
Suraj Adhikari, Information Officer of the Kaski District Court, stated that Judge Chandrakanta Paudel’s bench permitted police to remand him in custody for further investigation. Lamichhane, arrested on October 18 from the RSP office in Kathmandu, was transferred to Pokhara for the investigation.
Additionally, former Deputy Inspector General of Police Chabilal Joshi, arrested on similar charges on September 18, has also been remanded in custody for an additional seven days for further investigation.
