The Department of Cooperatives--the regulating body for cooperatives-- came up with the mandatory provision at a time when an overconcentration of cooperatives in certain localities has been reported. [break]
“Overcrowding of cooperative offices in certain places and operation of more than one cooperative from a single building have given out the negative impression that cooperatives are a dime a dozen. So, we have decided to allow only one cooperative in a single building,” Sudarshan Dhakal, registrar of the department, told Republica on Thursday.
Dhakal said the department has already directed all 38 district cooperative offices to immediately implement the new directive.
“The new directive is applicable only for the registration of new cooperatives as it would not be practical to order older cooperatives to relocate even if more than one of them is operating from a single building.
However, in case a cooperative moves its offices, we would not allow it to move into a building where another cooperative already has its office,” said Dhakal.
For the last few years the trend of opening more than one cooperative in a single building at a central location has increased.
The department has sent out two monitoring teams to the eastern and western parts of the country with the aim of monitoring 100 cooperatives and establishing their exact financial situation and performance status. The department has already monitored more than two dozen cooperatives operating in and outside Kathmandu Valley.
An inception report prepared by an independent consulting firm has unearthed several imprudent lending practices and flouting of existing laws by 20 savings and credit cooperatives in the Valley.
The report has already warned of an adverse fallout on the economy if the large amount of loans dispersed by cooperatives aren´t recovered on time.
The report has also found that some cooperatives are being operated as personal or family businesses and are not following minimum financial norms and standards.
The majority of savings and credit cooperatives studied were found to be lacking an adequate credit control mechanism to ensure recovery of loans.
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