At a time when dark clouds of uncertainty have shrouded the country's economy, cooperative institutions have landed into financial problems leading to the collapse of such financial institutions one after another. Last week, the officials of Sunaulo Diyalo Savings and Credit Cooperative in Indrachowk, Kathmandu, went out of contact, while its depositors filed complaints against the institution at the Cooperative Department of the Kathmandu Metropolitan City (KMC). The depositors sought government intervention to recover Rs 400 million that they said they'd deposited at Diyalo. Gautam Shree Multipurpose Cooperative in Kuleshwor, Kathmandu, faced similar problems a few months ago. The operators of the cooperative have been accused of embezzling nearly Rs 2 billion in deposits by its members. Over 1,100 depositors took to the Department of Cooperatives under the Ministry of Land Management, Co-operative and Poverty Alleviation, after they failed to get back their deposits of over Rs 1.75 billion.

Likewise, Asta Savings and Credit Cooperative in New Road, Kathmandu, has also been facing similar issues. Two weeks ago, 35 depositors filed complaints to recover Rs 6 million from the cooperative, after the cooperative operators suddenly went out of contact.

Paritosh Poudyal, Chairman of the Nepal Federation of Savings and Credit Cooperative Unions, said malpractices in the city and town-based cooperative institutions are the main problem behind the current crisis in the cooperative sector. “The cooperatives that have their money heavily in asset class investments such as real estate and stock trading than production-oriented business, have been seen landing into financial troubles,” he said. With growing cases of misconduct by cooperative institutions, the regulators have been receiving an increasing number of complaints. The records with the KMC show that it has registered complaints against six cooperatives accused of embezzling more than Rs 40 million deposited by their members in the first four months of the current fiscal year. Devendra Poudel, Director at KMC's Cooperative Department, said many cooperatives landed into problems due to their investment in real estate and the stock market. According to him, cooperatives were unable to return the money of depositors after these sectors crumbled over the past year. He said it has become necessary to make it mandatory for the cooperatives to maintain some reserves at the Nepal Rastra Bank. "Also, the members of cooperatives themselves need to be aware of the financial situation of their respective institutions which will help to avoid problems in the future," he said. Although the number of failing cooperatives has increased significantly over the past two years, the government has hardly taken any measures to penalize the misconduct of the operators of such financial institutions. Most of the depositors of Oriental Cooperative have failed to get back their money over the past decade despite Oriental being declared problematic for the past few years. Instead, the government declared Oriental a problematic cooperative for the second time on September 22 and asked the depositors to submit claims for the amounts embezzled by the cooperative's operators. Due to the government’s dilly-dallying it is unclear whether those who've lost their deposits will ever get back the doused amounts. Keshab Prasad Poudel, Chief of the Office of Problematic Cooperative Management Committee, cited the lack of proper documents related to deposits and loans of the 'troubled cooperatives' as one of the reasons for non-action against the operators of such institutions. "Government’s commitment to resolving the issues is also important in this context," he mentioned.