Nepal’s home minister, Ramesh Lekhak, has said the country’s national government is prioritising action on the misappropriation of co-operative savings funds.
According to a report from myRepublica, Lekhak addressed the committee tasked with identifying problematic co-operatives on Monday.
Twenty-one co-operatives have now been officially declared ‘crisis-ridden’ by the committee, representing Rs36.289bn (£338m) in embezzled funds from 59,587 depositors, with hundreds more co-ops believed to be in trouble.
At the meeting, Lekhak also said that work is being undertaken to arrest those who have embezzled and misappropriated co-operative funds.
A parliamentary committee was set up in May to investigate co-operative fraud across the country, make recommendations for those found guilty of misusing funds, and fast-track refunds to depositors.
In June, Nepal’s prime minister announced that Rs772.44m (£7.2m) has been returned so far. Pushpa Kamal Dahal also highlighted government action towards the establishment of an independent regulatory body for the protection of co-op savings.
Despite this, protesters continue to take to the streets demanding swifter action. Last Thursday they formed a human chain in Kathmandu, wearing black tape over their mouths to represent government silence regarding co-operative fraud.
Recent protests have also included calls for the resignation of politician Rabi Lamichhane in Nepal, for his alleged involvement in the scandal. Lamichhane is accused of embezzling co-operative funds during his role as managing director of Gorkha Media.
The issue has prompted a public conversation around Nepal’s co-operative economy. Of the country’s 32,000 co-operatives, 25,000 are financial co-operatives. The majority of these co-ops fall under local governments who lack the powers to investigate them, said chair of the Crisis-ridden Cooperatives Management Committee Kashi Raj Dahal, in an interview with the Kathmandu Post.
Raj Dahal recommended that an all-powerful autonomous national body be established to deal with the problem.
A report released by the International Monetary Fund (IMF) last month also raised the issue, stating that “more failures of co-operative lenders could endanger [the country’s] banking system soundness”.
IMF deputy managing director and acting chair, Bo Li, said that Nepal’s “financial policy should remain vigilant and focused on building regulatory frameworks that promote sustainable credit growth, while proactively addressing emerging vulnerabilities in the savings and credit co-operatives sector”.