The government on Monday established the National Cooperative Regulatory Authority (NCRA) to address the problems surrounding cooperatives and their depositors.

A Cabinet meeting on December 25 had decided to scrap the National Cooperative Development Board (NCDB) and establish the Authority through the ordinance. The ordinance came into effect after it was authenticated by President Ramchandra Paudel on December 29.

Minister for Land Management, Cooperatives and Poverty Alleviation Balaram Adhikari inaugurated the office of the Authority in Pulchowk, Lalitpur. While inaugurating the office, Minister Adhikari expressed confidence that with the operation of the powerful agency, the cooperative operators involved in embezzlement of savings of depositors will be brought to justice.

“The NCRA was formed so that the local, provincial and federal governments would take ownership of the problems faced by the cooperatives sector,” Minister Adhikari said addressing the office inauguration ceremony.

Adhikari said that the government had to immediately update the laws as outdated laws had led to various problems in the cooperative sector, and that they will be amended timely.

Meanwhile, the government entrusted Arjun Prasad Pokharel, secretary of the Land Management, Cooperatives and Poverty Alleviation Ministry, with the task of leading the newly formed Authority as its chairman until a new chair is appointed.

“The secretary of the cooperative ministry is leading the NCRA for the time being because in the initial stage, it would be better for the organisation to be led by someone who has the knowledge of the thematic ministry,” an officer at the ministry said.

The Authority will have a four-member board including the chairperson. An executive director of Nepal Rastra Bank and a joint secretary of the cooperative ministry will be ex-officio members. Likewise, a chartered accountant will also be on the board as an expert member.

Minister Adhikari on Monday administered the oath of office and secrecy to Chairman Pokharel, and members Guru Prasad Poudel and Madan Koirala. Poudel is an executive director at the central bank and Koirala is a joint secretary of the ministry.

“The expert member will be appointed shortly,” said Ganesh Prasad Bhatta, spokesperson of the ministry.

Chairman Pokharel also held a first meeting of NCRA on Monday after taking the oath of office. The meeting has decided to form a task force to study and recommend the standard related to the cooperative regulation, Bhatta said.

According to a provision of the ordinance, the employees at the dissolved development board will automatically be converted into employees of the NCRA.

“NCRA has been established mainly to monitor and regulate cooperatives,” Adhikari said. “We have formed the authority in such a way that the local, provincial and federal governments will take its ownership. The NCRA will carry out the regulatory work, investigate the cases of misappropriation of cooperative deposits and take actions against culprits.”

An officer at the Land Management, Cooperative and Poverty Alleviation Ministry also said that the dissolved development board was established with the concept of promoting the cooperatives whereas the NCRA will be focused more on their supervision and regulation. According to the official, the newly formed Authority is more powerful than the NCDB.

While the government officials have vowed to establish the NCRA as a powerful regulatory body to do away with anomalies that have marred the country’s vast cooperative sector, some cooperative operators have expressed reservations over certain provisions of the law introduced through the ordinance. They say that the ordinance includes a provision that prohibits cooperatives from depositing money more than a certain amount.

“The government should have classified cooperatives based on the service delivery, their capital or their volume of business, but the ordinance has stipulated to classify cooperatives based on geographical location,” said Khemraj Subedi, director of Nepal Savings and Credit Central Cooperative Association.

Subedi added this would set a bad precedent for the cooperatives that are operating effectively.

However, Bhatta, the spokesperson of the cooperative ministry, differs.

“As far as I know, earlier, when banks had not reached every nook and corner of the country, people were allowed to save any amount of money in cooperatives, but of late, as banks have reached even in remote areas across the country, a system has been implemented that allows only a certain amount to be deposited in cooperatives,” Bhatta said. “This helps in ensuring the savings of depositors are safe.”

The special parliamentary probe panel formed to investigate the issues of crisis-ridden cooperatives had suggested forming a powerful body to oversee cooperative issues. The cross-party House panel while submitting its report in mid-September had suggested the government to form such a panel within three months. Also, experts had pointed out the need for an all-powerful autonomous regulatory authority to resolve the crisis in the cooperative sector.

Around 3 million people have been associated as members in over 34 thousand of cooperatives operating across the country.