January 23: The central bank has decided to monitor the activities of cooperatives within the country following an increase in the number of such organisations facing financial crisis.
Nepal Rastra Bank (NRB) has formed a joint monitoring team in collaboration with the Ministry of Land Management, Cooperatives and Poverty Alleviation and the Department of Cooperatives to monitor the cooperatives in view of increasing irregularities.
The government is under pressure to make the monitoring of cooperatives effective as the civil cooperatives with a turnover of over eight billion rupees are facing problems recently. Service seekers of the cooperatives have started agitating in the streets demanding return of their savings.
"Due to the lack of effective monitoring, big cooperatives are facing problems," said Jhalakram Adhikari, registrar of the Department of Cooperatives, adding, “So we are conducting extensive monitoring together with the central bank."
Prior to this, extensive monitoring of large cooperatives was done back in 2010 with the involvement of NRB. The central bank had sent two deputy director-level staff for the monitoring done under the coordination of the Registrar of the Department. After 2014, the Department of Cooperatives has been monitoring the cooperatives alone but it has not been effective.
The Cooperatives Act-2074 BS allows the central bank to monitor big cooperatives. Similarly, the Cooperatives Regulation-2075 also permits NRB to monitor the cooperatives with transactions more than Rs 500 million. However, NRB insists it cannot monitor the cooperatives but only cooperate with the Department of Cooperatives in the monitoring process.
The Federal Department of Cooperatives has initiated discussions on setting up a separate monitoring mechanism to make the regulation of cooperatives effective.
Although the jurisdiction of the cooperatives have been transferred to the state and local levels as per the provisions of the constitution, discussions have been started to form a monitoring mechanism with the participation of all the three levels due to vulnerability of the regulatory body, Adhikari said.
Finance Minister Janardan Sharma had announced a separate mechanism to regulate cooperatives in the budget replacement bill. As per the provisions of the federal constitution, the rights of cooperatives have been transferred to the local level. Adhikari said that the mechanism could be set up with the participation of all three levels in respect to the spirit of federalism.
At present, all three levels of government have been regulating cooperatives to the best of their ability. However, irregularities have not been brought under control.