Nepal's Cooperative Crisis: Billions Locked Up as Promised Refunds Fail to Materialize

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
• Clear information about the status of payments and bounced cheques

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.