Kathmandu: In a significant move to protect savers and restore public trust in the cooperative sector, the government has announced the establishment of a revolving fund to return savings misappropriated by fraudulent cooperatives. This fund will be replenished through the auction of assets belonging to those who embezzled cooperative funds, as outlined in the national budget for fiscal year 2082/83.

Presenting the budget in a joint session of the Federal Parliament on Monday, Deputy Prime Minister and Finance Minister Bishnu Prasad Poudel revealed a comprehensive strategy to restructure and regulate Nepal’s troubled cooperative sector. The government plans to classify, integrate, and restructure problematic cooperatives, focusing on safeguarding the capital of small depositors.

One of the landmark provisions in the new budget is the protection of cooperative savings up to Rs. 500,000, ensuring a safety net for small savers who have been disproportionately affected by recent cooperative collapses.

To further strengthen the regulatory framework, the National Cooperative Regulatory Authority will intensify its oversight of savings and credit cooperatives. Additionally, a special tribunal is to be established to expedite the recovery of misappropriated cooperative loans, and legal action will be taken against directors, office bearers, and individuals involved in fraudulent lending or fund misuse.

The budget also outlines strict enforcement measures, including the freezing of passports and assets of directors, office bearers, and loan defaulters associated with failed cooperatives. These steps are designed to prevent flight risk and ensure accountability.

The government believes these reforms will bring transparency to the cooperative sector, curb systemic abuse, and strengthen the informal economy, which relies heavily on trust in cooperative institutions.

“These measures are necessary to restore faith in the cooperative movement and protect the financial interests of thousands of small savers,” said Finance Minister Poudel, expressing confidence that the reforms will revitalize the sector and deter future malpractice.