The government has started returning money to victims of cooperative fraud. On Monday, the Problematic Cooperative Management Committee refunded Rs1,399,216 to 378 small depositors, marking the first phase of the refund process for savers with deposits of up to Rs10,000.

According to Dilli Raj Acharya, chair of the committee, Rs989,716 was returned to 215 depositors of Kantipur Saving and Credit Cooperative, Rs41,465 to seven depositors of Pashupati Saving and Credit Cooperative Limited, and Rs368,035 to 156 depositors of Shiva Shikhar Multipurpose Cooperative Limited.

“We have started returning money after verifying the documents of depositors who applied for refunds,” said Acharya. “Our aim is to verify and process at least 500 applications every day. However, we have not been able to verify that many applications in the initial days.”

According to the committee, around Rs46 billion belonging to nearly 76,000 depositors of troubled cooperatives still needs to be returned. Most are small depositors. Depositors with savings below Rs500,000 have been classified as small depositors, while those with savings above Rs500,000 are categorised as large depositors. Of the total, only around 18,000 depositors have savings exceeding Rs500,000.

Minister for Land Management, Cooperatives and Poverty Alleviation Pratibha Rawal said efforts to recover loans from troubled cooperatives were being intensified. She said borrowers had started repaying loans after the names of defaulters were made public.

According to the committee, borrowers of troubled cooperatives have already repaid more than Rs20 million in loans. Authorities said loan recovery and deposit refunds would continue simultaneously.

At present, the government is returning funds only to depositors of cooperatives that have been officially declared problematic. So far, the federal government has designated 23 cooperatives as problematic. Deposit settlements for three institutions with relatively small liabilities have already been completed, while refunds for the remaining 20 are now underway.

Earlier, the National Cooperatives Regulatory Authority recommended that the government declare 16 additional cooperatives problematic, though the decision is yet to be formalised. Sources said the Authority is also in the final stage of recommending that the other 12 cooperatives be declared problematic.

According to the National Federation of Cooperative Victims, around 500 cooperatives have failed to return depositors’ savings. Federation chair Kushal KC said the government should also ensure refunds for victims of cooperatives that have not officially been declared problematic.

“The government should ensure refunds for victims of cooperatives that have not been declared problematic but have still failed to return depositors’ money, alongside those already declared problematic,” he said.

The government has established a revolving fund to finance refunds. The fund currently contains Rs600 million, including Rs250 million provided by the government and Rs350 million recovered through savings reconciliation and loan repayments.

The committee said it reconciled Rs2.9 million in savings and loans between mid-April and mid-May and recovered Rs21.8 million in loans during the same period.

Authorities said strict legal measures would be adopted to recover loans. Preparations are underway to allow borrowers to repay loans in instalments after making written commitments. Officials are also considering publishing family lineage details of defaulters and blacklisting family members if necessary to increase pressure for repayment. The committee has already started publishing family details of some major borrowers.

According to committee data, 17,000 depositors have savings below Rs25,000, while another 9,000 have deposits between Rs25,000 and Rs50,000. Deposits belonging to 36,522 depositors with savings of up to Rs100,000 and 21,619 depositors with savings between Rs100,000 and Rs500,000 are yet to be returned. There are 18,303 depositors with savings exceeding Rs500,000.

Around 18,000 depositors with savings of up to Rs10,000 will receive full refunds in the first phase.

From the second phase onwards, refunds will be capped at Rs50,000, with only half of the eligible amount returned. For example, a depositor with Rs20,000 remaining to recover will receive Rs10,000, while those with Rs50,000 or more will receive up to Rs25,000 in that phase.

In the third phase, the ceiling will rise to Rs100,000; in the fourth phase to Rs200,000; in the fifth phase to Rs500,000; and in the sixth phase to Rs1 million, with 50 percent refunded at each stage.

The government plans to return savings of up to around Rs500,000 within a year. Further refunds will depend on outstanding liabilities and the availability of funds, according to the committee.