Koshi Province Issues 35-Day Ultimatum to Inactive Cooperatives, Threatens Legal Action

The Koshi Provincial Government, through its Provincial Cooperative Registrar and Training Office in Sunsari, has initiated a significant regulatory crackdown on inactive cooperative unions and institutions within its jurisdiction. In a decisive move aimed at bolstering transparency and accountability, the office has issued a 35-day public ultimatum, demanding that these dormant entities submit their updated operational and financial details. Failure to comply within the stipulated timeframe will result in severe legal consequences, including potential registration cancellation.

This decisive action, announced on Shrawan 26, 2083 BS (corresponding to August 10, 2026 AD, assuming the current fiscal year), targets cooperatives that have consistently failed to submit their prescribed annual details for two consecutive years, as mandated by Section 60 (1) of the Provincial Cooperative Act, 2076. The Registrar's office has publicly released a comprehensive list of these non-compliant cooperatives, signaling a firm commitment to enforce regulatory standards across the province's cooperative sector.

The cooperative sector plays a pivotal role in Nepal's socio-economic landscape, particularly in rural and semi-urban areas, by mobilizing local savings, providing credit, and fostering community development. However, the sector has frequently faced criticism regarding a lack of transparency, mismanagement, and instances of financial irregularities. This regulatory intervention by the Koshi Provincial Government is therefore a crucial step towards addressing these systemic issues, aiming to restore public trust and ensure the financial health of these institutions.

To update their status and avoid punitive measures, the inactive cooperatives are required to submit an extensive set of 11 crucial documents. These include their annual reports and audited financial statements up to the current fiscal year, detailed annual programs and policies, comprehensive biographical information (three generations) of their directors, current data on shareholder numbers and capital status, detailed loan recovery reports, and asset declarations from both directors and managers. The submission of these documents is vital for providing a clear picture of each cooperative's operational and financial standing, enabling robust regulatory oversight and promoting good governance.

The list of non-compliant cooperatives is extensive, encompassing hundreds of institutions spread across all 14 districts of Koshi Province. Alarmingly, the attached data reveals that even cooperatives operating in major urban centers such as Biratnagar, Itahari, Dharan, Birtamod, Damak, and Bhadrapur have neglected to submit their details for the fiscal years 2080/81 and 2081/82. This widespread non-compliance highlights the urgent need for stricter enforcement and monitoring. The affected institutions range from large agricultural, savings and credit, and multi-purpose cooperatives in densely populated districts like Jhapa, Morang, and Sunsari, to smaller entities in hilly regions such as Taplejung, Solukhumbu, and Okhaldhunga.

The Provincial Cooperative Registrar's office has explicitly warned that failure to comply with the 35-day ultimatum will lead to severe legal repercussions. These could include the cancellation of the cooperative's registration, effectively dissolving the entity, or other stringent legal actions as per the prevailing laws. Such measures are intended to send a strong message to all cooperatives about the importance of regulatory compliance and transparent operations.

This initiative is expected to bring about much-needed transparency and accountability within the cooperative sector, fostering an environment of good governance. For investors and members, this move is critical as it aims to safeguard their interests by ensuring that cooperatives operate within legal frameworks and maintain sound financial practices. A well-regulated and transparent cooperative sector is essential for sustainable economic growth and for maintaining confidence in Nepal's broader financial system. The Koshi Province's proactive stance could serve as a model for other provinces grappling with similar challenges in their cooperative sectors.