Kathmandu Metropolitan City’s Department of Cooperatives has received complaints from 633 member depositors who claim their co-ops embezzled Rs 40.05m (£270,000).
According to a report in local paper My Republica, the complaints were filed in the first three months of the current fiscal year.
The co-ops accused are Development Savings and Credit Cooperative, which is said to have failed to pay back Rs 14.50 million (£97,000) to the depositors. Likewsise, Arakshya Savings and Credit Cooperative failed to pay back Rs 10.04m (£67,000) while Nava Sangkalpa Savings and Credit Cooperative failed to settle Rs 1.74m (£12,000) of depositors. Members of Jay Hanuman Savings and Credit Cooperative and Sukha Sambriddhi Savings and Credit Cooperative also claim their co-ops embezzled a total of Rs 13.88m (£92,000).
Nepal finds itself in a liquidity crisis due to a deficit in the balance of payment and trade. The crisis was exacerbated by excessive granting of loans at lower interest rates to help the economy recover from Covid-19. As such, some credit co-operatives, as well as other banks and financial institutions, are unable to satisfy the demand for cash from their customers.
In June the Department of Cooperatives (DoC) announced it had received complaints from 1,700 co-operatives members from 41 Kathmandu co-ops, including three multipurpose cooperatives, over an alleged joint misappropriation of more than Rs 815.36m (£5.43m) in total.
The complaints encouraged other members to request deposit withdrawals from other co-ops. In August the National Cooperative Federation (NCF) advised its members against distributing cash dividends to their members days after it had requested that co-ops limit member withdrawals to 5% of their deposits at a time.
The Department of Cooperatives and the National Cooperative Federation of Nepal were contacted for a comment.