Cooperatives In Nepal
Problems And Prospects

By Uttam Maharjan

FOR economic development, a country has to adopt development models best suited to its soil. So for underdeveloped agricultural countries like Nepal, the cooperative system of economic development is the right model. The cooperative movement in Nepal has been in force for over 40 years. The first cooperative society called Bakhan Singh Savings and Credit Cooperative was established in Chitwan in 1956 AD.

Flexible Stand

The cooperatives running at that time were registered under the Cooperative Act, 1959. This act was supplanted by the Cooperative Act, 1992 after the re-advent of multi-party democracy. In fact, the cooperatives could not flourish under the Panchayat dispensation. However, with the flexible stand taken by the post-1990 government on the development and promotion of cooperatives under liberal policy, the number of such cooperatives has swollen on an unprecedented scale. There are now over 5,000 cooperatives scattered across the country.

Cooperatives thrive on a spirit of collective endeavours and solidarity. As per cooperative principles, funds that are scattered among the public are brought together to form a pool, from which loans are distributed to the needy members at a concessional rate of interest. The other principles of cooperatives are voluntary and open membership; democratic control; equal participation; autonomy and freedom; training and information; cooperativeness among cooperatives; and cooperation and communal relations.

There are two kinds of cooperatives in Nepal: one permitted by Nepal Rastra Bank (NRB) and the other by the Cooperative Department. The cooperatives licensed by the Cooperative Department far exceed those licensed by NRB. Due to the dual system of licensing, the responsibility of inspecting and monitoring the performance of the cooperatives has often been passed up. As a result, the cooperatives have often transgressed their jurisdiction and carried out activities they are not authorized to. As per cooperative norms, the cooperatives should have limited transactions to their members only but in practice both members and non-members are equally involved in such transactions. Similarly, some cooperatives engage in banking transactions without obtaining permission from NRB. This shows that the cooperatives tend to carry on transactions of their own accord. Due to this ‘freedom’ , or rather indulgence, most of the cooperatives lack the right direction despite their dramatic surge since the 1990s.

It is an irony that the cooperatives have gone astray despite the well-knit hierarchy, which consists of the National Cooperative Federation at the top level followed by three central cooperative federations and 74 district cooperative federations. Besides, there are 68 district cooperative offices. Such a hierarchy should have exercised adequate control over the cooperatives.

In fact, the cooperatives have been profit-oriented rather than service-oriented. There is tough competition among the cooperatives themselves. In the thick of such competition, they have been oblivious of cooperative principles and vied with one another to secure a niche in the market. In this process, they tend to disburse loans haphazardly. The government also permits a cooperative to operate without scrutinizing its viability and the efficiency of its promoters. All this has resulted in some cooperatives being run by entrepreneurs without proper knowledge. Also, lack of inspection by the concerned authorities and failure to maintain financial discipline are responsible for the dismal performance of the cooperatives. There are several instances when promoters/entrepreneurs decamp with depositors’ funds due to inability to keep their organizations running. Such a tendency has badly eroded the public’s faith in them, even in those that are running satisfactorily.

Cooperatives are not bad in themselves. But they have ceased to target benefit at the needy people. As a matter of fact, cooperative are needed most in rural areas, where banking and finance facilities are limited. But most of the cooperatives are concentrated in urban areas. Kathmandu alone has over 600 cooperatives, whereas Manang has none.

The cooperatives have, however, contributed to the Nepalese economy by providing employment for thousands of people and by playing a role in the financial sector. But they have been disoriented and have no unit to fall back upon in case they need help.

To streamline the cooperatives, the government has proposed to set up the Cooperative Bank through bye-laws by the end of this fiscal year. (The proposed bank has been in limbo for over one and a half years. In fact, it was proposed in the 2057-58 budget.) Cooperative societies and federations are all agog now. Four hundred of them have pledged to invest 80 million rupees in the bank. The shareholders will be required to buy at least 10 shares of Rs. 1,000 each. The bank will have an authorised capital of Rs. 640 million, an issued capital of Rs. 320 million and a paid-up capital of Rs. 160 million.

Effective Tool

The bank was initially planned to be set up under the Cooperative Act but the act was not enacted in time. To shuffle out of a dilemma in operating the bank, the government also consulted with experienced foreign consultants and made up its mind to establish the bank without further delay. It may be recalled that the first Cooperative Bank was established in 2020 BS, which was merged with Agricultural Development Bank in 2024 BS due to scanty savings and poor investment track records. Let’s hope that the upcoming bank will not meet with the same fate and, rather, contribute greatly to the further development and promotion of cooperatives in Nepal. After all, cooperatives could be an effective tool for transforming the lives of the teeming poor people living in rural areas bycatalysing rural economic development.

Bandhs Never Muster Public Support

By B. M. Dahal

PEOPLE are filled with ire and the rallies they took out to protest the so-called bandh say it all. The peace rallies against the bandh across the nation are clear testimonies that people are fed up with such irrational attempts to cripplethe nation.

Disapproval

The rallies, which were attended by the people from various walks of life, were the people’s collective and spontaneous disapproval of the bandh. Those involved in bandhs, strikes and other forms of series of violent and destructive activities might have thought that they would muster the public support and sympathy. But this will be an illusion on their part to expect it. What they should understand is that people are not so foolish to extend their support to those who always want to create instability in the country and add to their woes.

With the people coming out to the streets showing their utter disapproval of bandhs, the organisers must think that the people are in favour of peace and stability. They have to realise that such mindless and irresponsible acts will never help them muster support from the Nepalese people.

Keeping in view the adverse impacts of bandh on social and economic development of the country, different organisations and interest groups have called upon the concerned individuals to withdraw it. It has widely been realised that bandhs and strikes have proved to be detrimental to the overall development of the country. The frequently organised bandhs and strikes in the past are responsible, to some extent, for the present crippled situation of the country’s economy, including the travel trade sector. Nepal has lost its image as a safe and tranquil destination abroad because of the bandhs and strikes which are often called without any significant reason.

Organising bandhs and strikes was the cheapest tool in the past for the opposition political parties, their sister organisations and professional groups to express their dissatisfaction over the government’s performance. They would go for bandhs to put on pressure to the government to get their demands met. Sometimes, they involved in destructive activities such as demolishing street railings and setting a fire on public and private properties. As people began criticising and expressing their dissatisfaction over such negative activities, the organisers seemed to contemplate about the effects of their activities.

The government has expressed its commitment to maintaining law and order situation throughout the country. The government has received support from the opposition parties in the Parliament to foil the much-hated five-day bandh to begin on April 23 and ensure security of people. As the calling of the bandh is an irrational attempt to disrupt the lives of the people and lead the country to backwardness and underdevelopment, the government, the ruling and the opposition political parties have joined their hands against it.

Showing their strong opposition toward, the bandh called by the Maoist terrorists, an all-party meeting held last week, under the chairmanship of Prime Minister Sher Bahadur Deuba, decided to move ahead against it. Attended by all the political parties representing in the Parliament, the meeting also told the organisers to take back the bandh programme for the welfare of the nation and the people. The opposition of all the political parties to the bandh will certainly discourage those involving in such activities.

The government has issued directives to all the transport entrepreneurs to operate their vehicles as usual. It has also told industries, factories and schools to keep them open during the days of bandh. The political parties have a crucial time to work hard to make people heave a sigh of relief at a time when the latter have become the victims of terrorism.

The terrorists had aimed at disturbing the School Level Certificate (SLC) examinations by calling for a five-day bandh in the first week this month. But they withdrew their decision as they were severely criticised for their irresponsible move. Many people from across the country had participated in the rallies against the terrorists’ attempt. They had told the organisers not to play with the future of the students, who are the future captains of the nation. It was natural on the part of the sensible citizens to oppose the terrorists’ destructive move because it was totally directed at creating hardships for the students to sit in the SLC examinations.

Civil Society Role

Since all forms of bandh and strike are against the interest of the people and the nation, they must be discouraged even in the days to come. The civil society could play an important role in stopping such mindless activities that hinder the overall development of the nation. The political parties following the democratic norms and values have to promise that they would not call for the suffocating bandhs in the future.

Have Kathmanduites Lost Their Sensitivity?

By BG

KATHMANDUITES celebrated the New Year last week with various merry-making programmes both within their homes and outside. The crowds that thronged into the limited picnic spots around the Valley on the last day of the last year and the first day of the New Year were the clear indications that Kathamnduites celebrated the New Year as they used to do in the past. For a many organisations the New Year Day was an occasion to organise general meeting and other ceremonies along with picnic at the picnic spots.

The people who gathered at Tribhuvan Park at Thankot for picnic saw an organisation of Dhankuta people now residing in the Capital Valley honouring Dr. Durga Pokhrel, president of the newly formed Women’s Commission amidst a formal function. Above the Dhankuta people were people from Bhojpur busy organizing general meeting of the Chaukidanda Samaj, below were Gurung students and the people from across the Mahakali. A little above them on the right were the staff of Sheer Memorial Hospital, Banepa. At the top of the spot was a group of Brahmin and Kshetri women busy sipping beer.

There were other innumerable small groups of picnickers scattered all over the well-managed green park in the west of Kathmandu. It seemed people from all over the Kingdom gathered at the Park to mark the New Year. "Half of Nepal could be seen here," a journalist was talking with his friends.

Smile was lurking in the lips of all the picnickers. Most of the men were busy drinking and sitting for ‘marriage’ and other card games. Women were preparing foods and talking with friends. Teenagers and small kids were playing badminton and other merry-making games. Those who failed to get chance to sit for ‘marriage’ were dancing and singing. The total environment was pleasing. No sad face, no worried person.

When the Kathmanduites were busy celebrating the New Year at the Thankot, Godawari and Dakshinkali, some people outside the Valley were mourning the deaths of their dear and near ones. Just two days before the New Year, the Maoists terrorists had killed 46 police personnel and general public in their latest attacks at Satabariaya and Lamahi of Dang district in western Nepal. In fact, the Maoists had been killing the general people, teachers, soldiers and police personnel in different parts of the country throughout the year. But the Kathmanduites did not seem to be affected by such deadly incidents as if they lacked sensitivity. Otherwise, they would not celebrate the New Year at such a grand manner when the country is entirely marred by the terrorists.

The way the Kathmanduites marked the New Year obviously signals two facts. First, the life in Kathmandu is yet to be affected by the terrorists’ activities. Secondly, Kathmanduites have started to take the killings of the Nepalese people, whether they are policemen or army personnel or general people or even the terrorists as a general incident.

In the past, the killing of a single Nepali could become the biggest issue for all Nepalese people. But now it does not seem so. Instead, they are habituated to say, "only ten were killed today." This lack of sensitivity among the Kathmanduites can never be taken as a positive sign especially when the country is in fight against the terrorism.