Societal Saving and Credit Co-op goes into liquidationThe Problematic Cooperatives Asset Management Committee has moved to liquidate the assets of Societal Saving and Credit Cooperative to raise cash to pay off its members, said the Ministry of Land Management, Cooperatives and Poverty Alleviation.
The Problematic Cooperatives Asset Management Committee has moved to liquidate the assets of Societal Saving and Credit Cooperative to raise cash to pay off its members, said the Ministry of Land Management, Cooperatives and Poverty Alleviation.
The government declared the New Baneshwor-based cooperative problematic after it ran out of money when borrowers defaulted on loans totalling Rs129 million. The nonpayers include high-ranking government officials and people with strong political connections, an official of Societal Saving and Credit Cooperative told the Post.
A Cabinet meeting last month decided to declare Societal a problematic institution after it failed to recover loans. Deepak Khadka, under-secretary of the Ministry of Land Management, Cooperatives and Poverty Alleviation said they took over the cooperative and confiscated its office equipment and computer software. “We have sent all the documents to the committee for further action,” Khadka said.
After Societal failed to pay back its depositors, 39 members filed complaints against the cooperative. Subsequently, the ministry formed a panel to conduct an investigation into the cooperative. Khadka said Societal had collected deposits from 1,010 members and disbursed loans to 80 debtors.
The total liabilities of Societal amount to Rs177.4 million. It has disbursed credit worth Rs129 million. The cooperative has a share capital of Rs7.9 million, and its fixed and movable assets are valued at Rs1.91 million and Rs1.73 million respectively.
According to Societal officials, the cooperative sank into financial problems due to poor management and its inability to recover loans from debtors. “The debtors who did not pay back loans taken from the cooperative include high-ranking government officials. Some debtors have strong political backing,” said an official of the cooperative who did not wish to be named.
The ministry said it froze the cooperative’s bank account and fixed assets including the properties of its board members. “By liquidating the assets, the committee will raise cash and distribute it on a proportional basis to the cooperative’s depositors,” said Khadka.
As of now, 11 cooperatives have been declared problematic by the government. In most cases, the financial cooperatives, in particular, are found to have deteriorated because of unsound lending practices, exposure to the volatile real estate market and embezzlement by their promoters.
The cooperatives declared ‘problematic’ by the government are Oriental Cooperative, Standard Savings and Credit Cooperative, Prabhu Savings and Credit Cooperative, Consumer Savings and Credit Cooperative, Kuber Savings and Credit Cooperative, Chartered Savings and Credit Cooperative, Vegas Savings and Credit Cooperative, Pacific Savings and Investment Cooperative, Kohinoor Hill Savings and Credit Cooperative, and Standard Multipurpose Cooperative.
Among them, Oriental Cooperative is at the centre of the largest scam in the sector. As per the Problematic Cooperatives Asset Management Committee, a government mechanism created to oversee troubled cooperatives, the liabilities of Oriental amount to over Rs17 billion.