Kathmandu Post

MONEY»

54pc Nepalis have access to co-ops

KATHMANDU, OCT 29 -
Cooperatives are making great strides in providing access to financial services to the common people. Such is their expansion that around 54 percent of the country’s population can now avail cooperatives facility within 30 minutes.

The Third Nepal Living Standards Survey (NLSS-III) says 53.9 percent of the household has access to cooperatives within 30 minutes. The survey shows that people’s access to cooperatives increased by 20 percent in the last six years, whereas access to

commercial banks increased by a meagre 11 percent over the period.

The NLSS finding illustrates what economists have been saying—cooperatives are emerging as the major players in the domestic financial market. Such is their dominance in the rural areas that products and services introduced by commercial banks targeting rural population have failed to yield desired results. The prime example is the ‘branch-less banking service’ launched by some banks.  “Many people at the grass root level are not getting services from the private sector banks. And those who are getting, are not being able to afford them as they are very expensive,” said Sudarshan Dhakal, registrar at the Department of Cooperatives (DoC). “In this scenario, their attraction towards co-operative has increased.”

Bankers attribute the expansion of cooperatives to the high interest on deposits offered by them, their availability and involvement of the community.  “As cooperatives are small in size, they can operate as per their clientele’s need,” said a chief executive officer of a leading commercial bank.

The DoC statistics show there are 22,666 cooperatives throughout the country as of mid-April, 2011. Around 65 percent of them are involved in financial transactions, while 11,000 are savings and credit cooperatives and 5,000 are multipurpose cooperatives.

The number of cooperatives carrying out large transaction has also been rising. Although there are no authentic data, DoC estimates that there are around 500 cooperatives in the country having an annual turnover of Rs 50 million. Savings and credit cooperatives in the last few years have attracted huge deposits of the common people. Such is the rise that people’s deposits in cooperatives more than doubled in the last fiscal year. Cooperatives had deposits of Rs 150 billion at the end of the last fiscal year, up from Rs 70 billion in 2009-10. The facility of depositing smaller amount, no income source disclosure provision and easy access have attracted the common people.

Of late, greater efforts are being made to supervise and monitor cooperatives. This year’s budget also came up with a supervision and monitoring provision, announcing cooperatives as the third pillar of economic development. Recently, two specialists from Nepal Rastra Bank were deputed to assist the department for the supervision and monitoring of cooperatives. “There is acute human resource crisis in the department,” said Dhakal. “Supervision of such a large number of co-operative is beyond our capacity as our human resources can’t analyze the balance sheet.”

With cooperatives expanding services and collecting deposits almost equivalent commercial banks, experts say absence of an all-powerful regulatory body to monitor them might put the public deposits at risk.

Recently, a high-level committee formed to make recommendations on policy, procedure and institution for solving problems in the cooperatives sector has made several suggestions to the government.

The committee has recommended forming a cooperative savings and credit Act, making a provision of a separate cooperative bank by amending the Banks and Financial Act 2006, establishing a cooperatives ministry and installing corporate governance in DoC, among others. “As savings and credit cooperatives account for more than 50 percent of the total cooperatives in the country and a huge amount of financial transaction is being carried out through them, a separate law is necessary,” states the report.



Third Nepal Living Standards Survey



ACCESS TO SERVICES (within 30 minutes)

                                     1995-96     2003-04     2010-11

Cooperatives               25.9%        33.7%        53.9%

Commercial Bank      20.7%         27.8%        39.9%

Posted on: 2011-10-30 09:04

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