Regulate Cooperatives

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Cooperatives have a long history of playing a crucial role in Nepal's socio-economic landscape by fostering financial inclusion and empowering communities, especially in rural areas. However, the cooperative sector is now confronted with an array of challenges that require immediate attention. The concerns raised are not without merit. Urban and city-centred savings and credit cooperatives often find themselves in a subordinate position to banks and financial institutions. These cooperatives are frequently owned and controlled by a select group of affluent individuals who often exploit deposited funds for personal gains. This has resulted in cooperative members facing difficulties accessing their savings in times of need and, in some cases, losing their entire savings due to financial frauds. It is of utmost importance to coordinate regulatory efforts to address these persistent issues. 


The cooperative sector in Nepal is grappling with numerous problems that threaten its very existence. Misallocation of resources, poor financial management, and insufficient oversight have led to financial instability, pushing several cooperatives to the brink of collapse. Swift action is imperative to prevent further deterioration. The Chief Administrative Officer of the Department of Cooperatives has emphasised the urgency of addressing these issues, and his commitment to regulating the cooperative sector is commendable. However, actions must follow words. Cooperatives must be held accountable for their financial practices, beginning with the submission of accurate and transparent financial audit reports. Enabling members to voice their concerns and lodge complaints is pivotal in ensuring accountability and transparency within these financial institutions.


The representatives from the regulatory body have pinpointed some of the root causes of the cooperative crisis. The reckless practice of extending loans without adequate collateral and excessive investments in consumption rather than production sectors are significant issues eroding the financial stability of many cooperatives. These practices not only jeopardise the interests of members but also undermine the integrity of cooperative activities themselves. One particularly troubling aspect is the freezing of assets by some cooperatives in response to financial turmoil. This desperate measure underscores the severity of the crisis and the lack of mechanisms to address it. 


The inconsistent response from the relevant regulatory office highlights the need for standardised procedures and a unified approach to promptly resolve such crises. The decision to transfer jurisdiction over certain cooperative offices to local levels represents a significant step. However, it must be accompanied by comprehensive reforms and stricter regulatory oversight to ensure the sustainability and integrity of the cooperative sector. Currently, there are numerous cooperatives in the specific region and an overwhelming number across the country, underscoring the sector's importance in Nepal's economic landscape.


 Neglecting the issues plaguing cooperatives would have far-reaching consequences, affecting not only their members but also the broader economy and society. In conclusion, the call for coordinated efforts to address the problems of the cooperative sector is both timely and urgent. The challenges confronting this vital area should not be underestimated. Regulatory bodies, local governments, and cooperatives themselves must collaborate to identify problems, implement reforms, and secure the long-term viability of cooperatives in Nepal. The cooperative movement possesses the potential to continue playing a pivotal role in fostering economic growth, financial inclusion, and community development, but this can only be achieved through collective action.

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