Nepal sets up recovery mechanism for troubled cooperatives

The Nepali government is taking a significant step to protect its citizens by establishing a Revolving Fund to return deposits to savers trapped in troubled cooperative institutions. This initiative, detailed in the Procedures for the Establishment and Operation of the Revolving Fund for Returning Savings of Members of Troubled Cooperative Institutions 2026, signifies a commitment to financial stability and consumer protection.

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The government is preparing to set up a ‘Revolving Fund’ to return deposits of savers trapped in troubled cooperative institutions.

The establishment of this fund addresses a critical issue that has left many Nepali citizens in financial distress. By implementing point 99 of the hundred-point agenda approved by the Council of Ministers, the government demonstrates its responsiveness to public concerns. The fund's operation under the Problematic Cooperative Management Committee ensures a structured approach to managing and distributing repayments.

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The agenda aims to ensure immediate repayment of savings to members of troubled cooperatives.

This move is further bolstered by the government's policies for fiscal year 2025-26 and the budget statement, which earmark up to Rs500,000 for repayment through this mechanism. The inclusion of recovered assets from implicated officials and a Supreme Court directive underscores the comprehensive nature of this recovery effort. For Nepal, this is not just a financial measure but a restoration of trust in the cooperative sector, which plays a vital role in the nation's economy.

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Policy framework and legal basis