The government is preparing to return deposits of up to Rs 100,000 to depositors affected by troubled cooperatives.
The Ministry of Land Management, Cooperatives and Poverty Alleviation has drafted a procedure aimed at refunding the savings of cooperative victims. A revolving fund is being established to return the money of citizens who have small amounts trapped in such cooperatives. The draft procedure has already been forwarded to the Ministry of Finance.
According to ministry spokesperson Damodar Wagle, once the Ministry of Finance approves the procedure, it will be sent to the Ministry of Law for its opinion. After Cabinet endorsement, the process of refunding savings to victims will begin. He stated that the government intends to compensate small savers first to reassure affected families that the state stands behind them.
The Ministry of Finance will provide seed capital for the revolving fund. From this fund, payments will be made to savers of cooperatives that have been declared problematic. Money recovered from the auctioning of such cooperatives will also be deposited back into the revolving fund to sustain its resources.
Victims have been organizing national campaigns and forming various committees to demand the return of their deposits. Around 34,000 cooperatives are operating across the country, and since they are registered under different levels of government, regulation has been difficult. Victims have demanded both the return of their money and strict action against operators involved in fraud.
While cooperatives that have adhered to cooperative principles have served their members well, many others that collected savings and issued loans in violation of these principles have faced financial collapse.
