The government is preparing to seize investments made by defaulters of troubled cooperatives in other organizations, as well as assets transferred to their family members, in an effort to repay affected depositors.
A newly endorsed guideline allows authorities to take strict action if the sale of a cooperative’s assets is not enough to cover depositors’ savings. In such cases, any fixed assets or investments shifted by defaulters or their family members—for reasons such as inheritance division or divorce—can be frozen and eventually auctioned.
The Ministry of Land Management, Cooperatives and Poverty Alleviation has announced that the procedure has been published in the Nepal Gazette and is now in effect. The Council of Ministers introduced the measure as part of broader efforts to ensure that depositors of problematic cooperatives receive their funds.
Under the new rules, a revolving fund will be established and operated by the Problematic Cooperative Management Committee (PCMC), which is responsible for handling issues related to troubled cooperatives. This fund will be used specifically to return depositors’ savings in cooperatives declared problematic and placed under the committee’s supervision.
The fund will include government grants, proceeds from auctioning assets of cooperative officials and individuals involved in misappropriation, and money recovered from those found guilty of embezzlement. Refunds collected from the concerned cooperatives will also be added to the fund.
For repayment, the amount recorded in a depositor’s account one day before the cooperative was officially declared problematic will serve as the basis. However, depositors who have outstanding loans with the cooperative must first clear their dues before receiving their savings.
Additionally, savings belonging to directors, managers, their immediate family members, and individuals involved in misuse or embezzlement will only be returned after other depositors’ claims are fully settled, in accordance with the law.
Earlier, the PCMC issued a 15-day deadline for directors, borrowers, managers, employees, and guarantors of problematic cooperatives to repay outstanding loans. The ministry has identified 20 such cooperatives for immediate action.
