Government Pledges to Seize Passports and Auction Assets of Cooperative Fraud Suspects
Kathmandu, May 30 – In an announcement made today, Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel stated that those found guilty of embezzling cooperative funds will have their passports seized.
On Thursday, while presenting the national budget for the fiscal year 2025-26 to a joint session of the federal parliament, Paudel disclosed the government’s intention to confiscate the passports of cooperative operators, officials, and those implicated in misusing depositor funds.
He added that the properties belonging to those who are accused would be confiscated and put up for sale at auctions, with the money gathered from these sales being utilized to create a rotating fund aimed at providing compensation to the families impacted.
The proposed fiscal budget includes the creation of a Cooperative Loan Recovery Tribunal (CLRT). Additionally, the government intends to categorize, unify, and enforce comprehensive changes within the cooperative sector.
In January, the government issued an ordinance to establish the National Cooperative Regulatory Authority (NCRA), which took over from the National Cooperative Development Board. This new body was intended to be a robust solution for assisting depositors in recovering their funds. However, despite being set up four months ago, the NCRA remains mostly ineffective because the government has not appointed its head.
Last month, Arjun Pokhrel stepped down from his position as secretary at the Ministry of Land Management, Cooperatives, and Poverty Alleviation. He has been tasked with serving as the interim chairperson until a permanent appointment can be made. AfterPokhrel’s retirement on April 15, Kedar Nath Sharma, the present secretary of the same ministry, took over temporarily. Recently, the government declared an open slot for the top post within theAuthorityand noted that spotsfor twomembersoftheboardarestillunfilled.
Even though the budget committed to establishing the Tribunal as another means to reclaim cooperative funds, Kashi Raj Dahal, who formerly chaired the Crisis Cooperative Management Committee, stated that this notion isn’t novel. He highlighted that the plan was previously detailed in the Cooperative Act of 2017, with the administration currently moving forward with putting it into practice.
Dahal elucidated the clear distinctions between the functions of the two entities: “The Authority’s role involves registering and overseeing cooperatives, making sure they adhere to legal requirements, whereas the Tribunal will operate akin to a court system, providing an avenue for victims to file grievances and pursue justice.”
Nevertheless, he took issue with the finance minister for the vagueness in the budget address. He pointed out, “Although the administration mentioned seizing the possessions of cooperative managers, they didn’t specify what kinds of properties would be subject to this action. The effectiveness of the budget would have improved if it had outlined whether, when an operator’s holdings aren’t enough, assets from their relatives might also face seizure.”
Dahal pointed out that although there are legal measures for seizing assets, the government failed to seize the moment to clarify how cooperatives would be incorporated into the national economy to boost productivity.
The budget includes provisions for protecting deposits, suggesting that amounts up to Rs500,000 placed in cooperatives will be secured via a Deposit and Credit Protection Fund. Although last year’s budget included a comparable commitment, it wasn’t carried out due to the absence of necessary procedural guidelines.
Ganesh Prasad Bhatta, the spokesperson for the Ministry of Land Management, Cooperatives, and Poverty Alleviation, showed confidence that this year’s pledge will be realized.
“The earlier agreement couldn’t materialize because of insufficient operational processes. However, this time around, setting up a revolving fund offers a transparent system for reimbursing those who made deposits,” he stated.
Moreover, the financial plan includes initiatives to digitalize the procedures for registering and releasing collaterals in banks, financial institutions, and cooperatives. The objective is to boost efficiency via a unified system.
It is estimated that approximately 3 million individuals are part of more than 34,000 cooperatives nationwide.
Numerous cooperative members affected nationwide have established protest groups and have been staging demonstrations over the last few years, demanding the return of funds they had deposited in these cooperatives.
Madhav Shrestha, aged 44, who was victimized as a depositor at the Uttam Cooperative located in Kapan, Kathmandu, states that implementing provisions like the CLRT and the revolving fund proposed in the government’s budget for cooperatives could be seen as a favorable move.
Shrestha notes that last year too, the government incorporated praiseworthy elements into the budget, yet these measures failed to be put into practice.
“This time around, we shouldn’t get overly enthusiastic just because of the budget announcement. The key point lies in how it will be implemented,” he stated.
A significant number of individuals have submitted grievances across multiple districts, leading to legal actions against numerous persons, such as Rastriya Swatantra Party leader and ex-home minister Rabi Lamichhane, for allegedly misappropriating funds from the cooperative.