Kathmandu — The government has decided to bring an ordinance to regulate cooperative organizations and return the sunk money of savers. The ordinance to amend the Cooperative Act, 2074, the Rastra Bank Act, 2058, and the Deposit and Credit Guarantee Fund Act, 2073 was passed by the Council of Ministers on Tuesday. The ordinance will come into effect after it is approved by the President.

Through the ordinance, the government is going to repeal the National Cooperative Development Board Act, 2049. The ordinance provides for the automatic transfer of the assets, liabilities, and employees of the National Cooperative Development Board to the authority.

The ordinance also provides for the establishment of a powerful National Cooperative Regulatory Authority to regulate cooperatives that conduct savings and loan transactions. The ordinance also provides for settlement in cases other than criminal, money laundering, and organized crime pending in the court, registration and classification of cooperatives, individual savings and loan limits, affiliation to the Credit Information Center, establishment of cooperative loans and security funds, among others.

The ordinance has made special provisions for the return of savings. ‘Notwithstanding anything written elsewhere in the prevailing law, savings up to five hundred thousand rupees deposited by members of a cooperative organization or a cooperative organization declared problematic under Section 104 shall be paid on first priority,’ the ordinance states. ‘In the case of savings exceeding five hundred thousand rupees deposited by a member, if the concerned organization is not in a position to pay it at once, the member’s savings amount shall be paid proportionally by formulating criteria.’

For the purpose of returning savings, the ordinance also provides that the management committee of such a cooperative organization or the management committee of such an organization pursuant to Section 105 of the Cooperative Act may sell the collateral security taken while providing the property or loan of such an organization.

‘Before selling the collateral taken by the cooperative while providing the loan, the borrower shall be given time to repay the loan of the cooperative organization and if the loan is not repaid within that period, such collateral shall be sold at auction,’ the ordinance states. ‘If, while selling such collateral, the borrower receives an amount more than the amount due, the amount remaining after the borrower has paid the amount, shall be returned to such borrower.’

The ordinance clearly provides for the cooperative to recover the amount received for providing houses, land or other machinery or equipment on lease or rent and use such amount for the purpose of returning the savings of the saving members. ‘For the purpose of returning the savings of the savers at risk, the authority shall prepare a standard and time-bound return action plan and return the savings of the saving members,’ the ordinance states.