More than 90 percent of the savings deposited in troubled cooperatives has yet to be returned to rightful depositors, even seven years after the government formed a committee to resolve their financial woes. The Problematic Cooperatives Management Committee, which was formed in 2018 to manage the assets and liabilities of failing cooperatives, has been able to return only about 10 percent of the total amount claimed by depositors. 

So far, the federal government has declared 23 cooperatives as problematic and assigned the committee to handle their settlements. Of the Rs 38.42bn claimed by depositors from 22 of these institutions, the committee had returned just Rs 3.71bn to around 5,000 depositors by the end of June.

The committee has yet to begin reviewing complaints from depositors of Ideal Yamuna Cooperatives, which was declared problematic only recently. Data released by the Office of the Problematic Cooperative Management Committee shows more than 50,000 depositors are still awaiting the return of a combined Rs 34.71bn from these institutions. To recover these funds, the committee has been working to auction the movable and immovable assets of cooperative promoters and managers.

Committee Chairperson Shriman Kumar Gautam said the committee has expedited efforts to identify and freeze assets held by the promoters and managers of troubled cooperatives. “Asset valuation and auction processes have also been initiated accordingly,” he said. “We returned Rs 2.88bn to depositors in the current fiscal year alone, compared to just Rs 836.5m in the previous year.”

Under the Cooperative Act, 2017, the Ministry of Land Management, Cooperatives, and Poverty Alleviation can declare a cooperative “problematic” if it fails to return deposits parked by its members, faces a financial crisis or engages in irregularities. The ministry may appoint a committee to oversee the resolution process on the recommendation of the concerned registrar.

Of the 23 cooperatives declared problematic so far by the federal government, the committee has completed settlements in only three: Kuber Saving and Credit Cooperative, Chartered Saving and Credit Cooperative Limited, and Standard Multi-Purpose Cooperative. Several provincial governments have also declared cooperatives under their jurisdictions as problematic.

The cooperative sector, which was once described as one of the three pillars of the economy along with the public and the private sector, is now plagued by deep-rooted problems stemming from weak regulation, political interference and poor governance. Many cooperatives without proper oversight, allowing financial mismanagement and misuse of public deposits to flourish.