The YSESF was established by the government of the UCPN (Maoist) some four and half years ago as a vehicle to provide unsecured low-interest loans of up to Rs 200,000 to raise access of jobless youths to credit and promote entrepreneurship among them. [break]
Initially, the Fund had sought help of banks and financial institutions to extend loans to jobless youths. But after these institutions failed to rope in enough clients, the YSESF earlier in 2013 decided to mobilize savings and credit cooperatives as well to provide loans to youths.
So far, the YSESF has extended Rs 600 million among 559 savings and credit cooperatives across the country. However, there are complaints that most of these cooperatives are affiliated to political parties and funds made available by the YSESF are being used to create vote banks rather than generating self-employment opportunities for jobless youths. It is also said there is problem in recovery of loans that were issued so far.
“We have heard of these complaints,” Finance Minister Shankar Koirala told Republica. “That´s why we have directed the YSESF not to release second installment of Rs 600 million to the cooperatives until it is clear that loans extended so far are being put into proper use.”
In this regard, the Ministry of Finance is thinking of framing tough selection criteria for cooperatives, the minister further said without elaborating. “We believe making names of 559 cooperatives and 16,500 borrowers public through a website would also ensure transparency and promote accountability,” Minister Koirala added.
The YSESF has always been mired in controversy since its establishment.
Around one and half years ago, for instance, there were complaints that banks and financial institutions invested funds acquired from the YSESF in high-yielding deposit products, instead of distributing funds to jobless youths.
At that time, it was said that financial institutions like Western Rural Development Bank, First Microfinance Development Bank and Madhuban Savings and Credit Cooperative had not used a single penny from a sum of Rs 27 million given by the YSESF. While, commercial banks like Kist, which had received Rs 50 million in credit, had only utilized 5 percent of the total amount.
Later, some banks and financial institutions that feared recovery of loans denied to credit without guarantee, arguing extension of unsecured
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