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Credit Flow to Fake Business Establishments lands Cooperatives in Trouble

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Credit Flow to Fake Business Establishments lands Cooperatives in Trouble

May 6: A report prepared by a committee formed by the government has found that some cooperatives have become unable to repay the deposits of the general public. The report states that those cooperatives have become problematic due to the credit flow to fake business establishments set up by the cooperatives themselves.

The Problematic Cooperative Management Committee submitted the report on the problematic cooperatives to Minister for Land Management Cooperatives and Poverty Alleviation Shashi Shrestha on Thursday.

The report has declared Oriental Co-operative Limited, Social Savings and Loan Cooperative Limited and Luniva Multipurpose Cooperative Limited as problematic cooperatives.

Receiving the report, Minister Shrestha requested to work in such a way that the basic values, beliefs and principles of the cooperatives are adhered to and arrangements are made to provide funds to the claimants on the basis of principles and criteria of the cooperatives.

 To prevent problems in the cooperatives, Minister Shrestha said that the ministry is ready to make necessary legal and policy arrangements while emphasizing on the need to work out an action plan.

The committee also concluded that the cooperatives are facing problems because they acted contrary to the legal responsibility of promoting good governance in the cooperatives and strayed from embracing the concepts of self-accountability, honesty and mutual assistance.

The report denotes that the problem surfaced due to the misuse of depositors’ savings by the cooperatives in direct violation of the law against the purpose and principle of the cooperative, lending without collateral or security or maintaining unnaturally high value of collateral, setting up artificial business and lending.

Chairman of the Problematic Cooperative Management Committee, Kashiraj Dahal expressed his commitment to work in a way to solve the problem of problematic cooperatives by formulating certain criteria.

 

 

 

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