The Department of Cooperatives is conducting due diligence audits of few
troubled savings and credit cooperatives to find out their exact assets
and liabilities, so as to ease the process of returning deposits of
billions of rupees to customers.
A high-level committee formed in January to spot out the problems of savings and credit cooperatives had identified 33 cooperatives as troubled. However in the initial phase, the Department of Cooperatives will conduct due diligence audits of around three firms, namely, Exim Cooperative, Oriental Cooperative and Standard Cooperative.
“We had to resort to this technique after these cooperatives failed to submit various documents and a detailed deposit reimbursement plan even after repeated calls,” a high-ranking official of the cooperatives department said on condition of anonymity.
A high-level committee led by deputy governor of Nepal Rastra Bank Maha Prasad Adhikari had previously asked all 33 cooperatives to submit statements of asset, investment and loans. It had also asked troubled cooperatives like Oriental to submit a detailed plan on how it was planning to return deposits of customers.
“Since they did not submit the documents sought by us, we have not been able to ascertain their financial position,” the official said.
While the government is still struggling to determine assets and liabilities of troubled cooperatives, thousands of depositors are deprived of their money to the tunes of billions of rupees.
Oriental, for instance, which faced liquidity crisis about eight months ago and has not been able to return money of many clients, holds deposits of over Rs 3.5 billion of more than 7,000 customers.
Exim and Standard also have public deposits of hundreds of millions of rupees.
“We hope the due diligence audits will help us identify assets and liabilities of these cooperatives, following which we can auction their properties and return the money to depositors,” the official said. “If members of other troubled cooperatives approach us we can conduct such audits of other cooperatives as well.”
One of the main reasons why troubles are continuing to brew up in cooperatives is the presence of weak legal framework.
“We cannot fine cooperatives more than Rs 1,500 and legal action can be taken against them only after members file police complaints,” the official said. In addition to this, human resources at cooperatives offices are not qualified enough to handle tricky business of these financial intermediaries.
To address this problem, the budget for the current fiscal year has introduced a provision which paves the way for the cooperatives department to seek help of Nepal Rastra Bank to regulate and monitor activities of cooperatives whose annual transaction exceeds Rs 500 million.
src THT
A high-level committee formed in January to spot out the problems of savings and credit cooperatives had identified 33 cooperatives as troubled. However in the initial phase, the Department of Cooperatives will conduct due diligence audits of around three firms, namely, Exim Cooperative, Oriental Cooperative and Standard Cooperative.
“We had to resort to this technique after these cooperatives failed to submit various documents and a detailed deposit reimbursement plan even after repeated calls,” a high-ranking official of the cooperatives department said on condition of anonymity.
A high-level committee led by deputy governor of Nepal Rastra Bank Maha Prasad Adhikari had previously asked all 33 cooperatives to submit statements of asset, investment and loans. It had also asked troubled cooperatives like Oriental to submit a detailed plan on how it was planning to return deposits of customers.
“Since they did not submit the documents sought by us, we have not been able to ascertain their financial position,” the official said.
While the government is still struggling to determine assets and liabilities of troubled cooperatives, thousands of depositors are deprived of their money to the tunes of billions of rupees.
Oriental, for instance, which faced liquidity crisis about eight months ago and has not been able to return money of many clients, holds deposits of over Rs 3.5 billion of more than 7,000 customers.
Exim and Standard also have public deposits of hundreds of millions of rupees.
“We hope the due diligence audits will help us identify assets and liabilities of these cooperatives, following which we can auction their properties and return the money to depositors,” the official said. “If members of other troubled cooperatives approach us we can conduct such audits of other cooperatives as well.”
One of the main reasons why troubles are continuing to brew up in cooperatives is the presence of weak legal framework.
“We cannot fine cooperatives more than Rs 1,500 and legal action can be taken against them only after members file police complaints,” the official said. In addition to this, human resources at cooperatives offices are not qualified enough to handle tricky business of these financial intermediaries.
To address this problem, the budget for the current fiscal year has introduced a provision which paves the way for the cooperatives department to seek help of Nepal Rastra Bank to regulate and monitor activities of cooperatives whose annual transaction exceeds Rs 500 million.
src THT
