KATHMANDU, Oct 30: The government's promise to return money deposited by millions of people in troubled cooperatives remains largely unfulfilled, leaving billions of rupees locked up and savers struggling to recover their lifetime savings.
People who deposited their hard-earned money for future needs have been left in distress after cooperative operators allegedly misappropriated funds and fled. Victims from across the country have repeatedly travelled to Kathmandu to stage protests and sit-ins, forcing successive governments to promise swift refunds. But victims say repeated agreements have yielded little progress.
The case of Delight Multipurpose Cooperative in Jawalakhel, Lalitpur, illustrates the problem. Its chairman Sher Bahadur Tamang and managing director Ashish Tamang allegedly fled after securing release on bail by handing a depositor a cheque for Rs 2.5 million at a police office. The cheque bounced, and Lalitpur District Court has issued arrest warrants against both men in connection with a banking offence. Police say they are searching for them.
Court verdicts fail to secure refunds
Nearly a year after a court ruled in favour of depositor Radha Pathak, she has yet to recover her savings.
Judge Nirmala Yongya of the district court delivered the verdict on December 28, 2025, in a case filed by the government attorney's office. Yet Pathak has received neither the amount promised in the cheque nor her original savings.
The cooperative's office, located about 150 metres from the Lalitpur District Police Range, remains locked. Its operators have reportedly been on the run for three years. Victims accuse the cooperative of misappropriating hundreds of millions of rupees belonging to depositors.
The problem extends well beyond Delight Cooperative. Depositors of 23 cooperatives declared problematic by the government have also struggled to recover their money. Thousands of others whose cooperatives have not been formally classified as problematic remain outside the government's relief programme.
The loss of savings has caused severe financial and emotional distress. Some victims say they cannot even afford medicines when they fall ill. Despite court proceedings and investigations, actual repayment remains elusive.
Victims are demanding effective enforcement of court verdicts, action against absconding operators and clear information about the status of payments and bounced cheques.
Image Cooperatives returns Rs 10 million to its depositors
Regulators overwhelmed by complaints
The Bagmati Province Cooperative Registrar's Office regulates most cooperatives operating in Kathmandu Valley. Although its headquarters is in Hetauda, it has opened a branch in Sanepa, Lalitpur, to make services more accessible to victims seeking refunds.
Registrar Yadunath Acharya said the office had recommended only five cooperatives for formal classification as problematic and forwarded their cases to the Ministry of Land Management, Cooperatives and Poverty Alleviation. Other applications are being processed, while some have been returned because of incomplete documentation.
Victims continue to visit the Department of Cooperatives and other regulatory agencies, but these bodies have made little progress in securing refunds. Their work largely involves registering complaints, collecting missing documents and attempting to recover loans issued by cooperatives.
Weak regulation over the past five to six years allowed problems to spread across the sector. Serious difficulties became apparent from 2020, when operators of several large cooperatives began facing arrest over alleged misuse of depositors' money.
Before the crisis, Nepal had 34,512 registered cooperatives, including more than 24,000 savings and credit cooperatives, according to figures from the Department of Cooperatives and the Nepal Federation of Savings and Credit Cooperative Unions. More than six million people were members.
The sector was estimated to contribute around 5 to 7 percent of Nepal's gross domestic product. A slowdown in the real estate market between 2021 and 2023, coupled with poor management, exposed widespread misuse of deposits. The number of active cooperatives has since fallen to an estimated 31,000 to 32,000 following closures, mergers and inactivity.
Rs 650 million revolving relief fund
The government has established a revolving relief fund to repay depositors of troubled cooperatives. It claims to have started distributing refunds, but the assistance remains limited.
Under its fiscal policy and budget for 2026/27, announced in May, the government pledged to return deposits of up to Rs 500,000 to victims of problematic cooperatives. It had issued operating guidelines for the revolving fund in April.
The government contributed Rs 250 million to the fund, while cooperative operators added another Rs 400 million, taking the total to Rs 650 million. Money recovered from loans issued by troubled cooperatives will also be added.
Some depositors say they have received only Rs 5,000 so far, despite having deposited hundreds of thousands or even millions of rupees. No clear timeline has been announced for full repayment.
The fund depends heavily on recovering loans and selling cooperative assets. Identifying borrowers, tracing assets owned by operators and pursuing legal recovery can take years. Some operators remain absconding, while victims suspect that others have hidden or transferred assets.
The government plans to replenish the fund through recoveries and asset sales. Unless these efforts improve, its capacity to provide meaningful relief will remain limited.
Another major concern is that the programme covers only cooperatives formally declared problematic. The federal government has classified 23 cooperatives under this category, although victims say hundreds more should be included.
76,000 depositors, Rs 46 billion in liabilities
According to the Problematic Cooperative Management Committee, around 76,000 depositors are owed nearly Rs 46 billion by cooperatives under its jurisdiction.
The committee says approximately 11,000 depositors have received full or partial payments so far.
The government initially prioritised depositors with savings of up to Rs 10,000. In October, it expanded the priority categories to include single women, senior citizens, Dalits and indigenous communities, people with severe disabilities and those suffering from life-threatening illnesses.
Land Management, Cooperatives and Poverty Alleviation Minister Pratibha Rawal has said the government will not abandon victims. Discussions are also underway to establish dedicated police desks and special court benches to speed up investigations and hearings involving cooperative fraud.
But the government has yet to specify when depositors will receive their money.
Small savers get priority
The government says its first phase of refunds will focus on small depositors with savings of Rs 500,000 or less, along with senior citizens, single women and seriously ill people.
The Problematic Cooperative Management Committee says around 11,000 depositors from Shivashikhar, Kantipur, Krishi Bikas and Gorkha cooperatives, among others, have received assistance worth Rs 710 million.
The payments have been made through cash refunds and adjustments against outstanding savings, either partially or in full.
Committee information officer Bhawana Pokharel said authorities had stepped up action against borrowers who took loans from troubled cooperatives but failed to repay them.
Bagmati Province Cooperative Registrar Acharya said his office was making every effort to facilitate refunds in accordance with ministry directives.
Announcements and relief guidelines alone will not resolve the crisis. The government needs to identify troubled cooperatives that remain outside the official list, trace and recover assets held by operators and borrowers, verify depositors' claims publicly and publish a clear repayment schedule.
The success of the refund programme will ultimately depend on how much money authorities recover, how transparently they distribute it and how quickly victims receive their savings.
