Kathmandu. KATHMANDU: The government has concluded that the loan recovery of cooperatives has been affected due to the economic recession seen in the country of late. The 5-year Financial Sector Development Strategy prepared and implemented by the Ministry of Finance has concluded that the loan recovery of cooperatives has been affected due to lack of liquidity in the banking system and economic recession. The government believes that due to the recession, it is difficult for the savers to return the money on time.
According to the Financial Sector Development Strategy, the lack of adherence to the principles of cooperatives and the influence of limited interest groups in management have led to serious problems of good governance. Financial risks have increased as savings and credit cooperatives do not show accurate details of bad loans and do not provide adequate funds for loan losses. The government has concluded that it is difficult to obtain integrated data and provide effective regulation as the regulatory bodies in the federal system are divided into three tiers.
According to the Financial Sector Development Strategy, a Debt Recovery Tribunal has been formed for the cooperative sector, but the Savings and Credit Guarantee Fund has not been established and the Act provides for affiliation in the Credit Information Center. As detailed regulations and procedures are in the process of being formulated, concrete quantities have not been achieved.
The strategy, which will be implemented from fiscal years 2082/83 to 2086/87, will increase the financial sector’s contribution to the gross domestic product (GDP) by 6.5 percent. From 65 percent to 7. The target is to reach 5 percent. The strategy also aims to extend insurance coverage to 60 per cent of the total population.
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The number of cooperatives in Nepal has reached 32,965. Among them, 147 are under the federal government’s regulation, 7,599 cooperatives are under the provincial government and 25,219 cooperatives are in operation at the local level.
The total population of Nepal was around 37.37 crore in the period of mid-July last year. About 40 percent of the population is involved in cooperatives. The total number of members in the cooperative sector has reached 10,905,192. Of these, 54. 56 percent of the members are women and 42 percent are women. 47 percent of the population is male.
The total share capital of the cooperatives is Rs 143.29 billion. Similarly, the amount collected in savings has reached Rs 1,125,28,43,58,470. Cooperatives have provided direct employment to 90,265 people.
Various standards and guidelines have been implemented for good governance, transparency and effective regulation of the cooperative sector. The government has implemented the Supervision, Inspection and Monitoring Directive-2077 of the cooperatives dealing in the main transaction of savings and loan, the Consolidation and Division of Cooperatives Directive, 2077, the Cooperatives General Assembly (Work Arrangement) Directive, 2076 and the directive issued to the cooperatives on the prevention of money laundering, 2074.
The report said, “The study was carried out to address various anomalies and problems related to good governance seen in the cooperatives in recent years. Based on the study, the Government of Nepal has formed the National Cooperative Regulatory Authority to strengthen the regulation, supervision and monitoring of savings and credit cooperatives through amendment to the Cooperatives Act, 2074. The NRA aims to systematize the effective regulation of the cooperative sector and the recovery of the lost money of savers. ’
What is the government plan?
The government is planning to bring legal reforms in the financial sector development strategy for effective regulation of savings and credit cooperatives. To ensure financial base and good governance, the government will determine clear and stringent criteria for the registration of new savings and credit cooperatives, use technology for strengthening institutional governance, integrate and update standards and guidelines related to risk management and good governance, and prepare and implement an integrated framework for effective supervision, monitoring and regulation.
Likewise, the government has the strategy to manage the financial crisis that may come to the savings and credit cooperatives, to manage the crisis-hit cooperative management fund, to prepare and implement the criteria related to the merger and division of cooperatives, to provide necessary indicators for the promotion of good governance in cooperatives and to issue a national cooperative policy.
Similarly, the government has adopted a strategy to revise the directives in line with international standards and good practices and to enhance the regulation and supervision capacity of the savings and credit cooperative sector.
To fulfill this strategy, the government will amend the Cooperative Act, 2074 to include provisions for financial transparency, member rights security and digital transactions, set regulatory standards to systematize the monitoring and regulation of financial cooperatives, arrange specific indicators in coordination with Nepal Rastra Bank for the regulation of financial cooperatives, and improve the cooperative sector by making regular monitoring, intensive monitoring, asset laundering monitoring and impact monitoring effective ।
The government has adopted a strategy of systemic reforms to enhance the managerial capacity of the savings and credit cooperative sector. The government’s strategy is to update the management information system on cooperatives and poverty, compulsorily include all cooperatives, develop a mechanism to monitor cooperatives online, set standards on savings and loans, loans taken by its directors, develop and implement digital platforms including integrated digital financial system, mobile banking, blockchain and AI-based service delivery system.
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