Former Minister Khatiwada stresses second-tier regulation of cooperatives

KATHMANDU: Former Finance Minister Yuba Raj Khatiwada has emphasised the necessity for second-tier regulation of cooperatives.

While commenting on the working paper presented on the second day of the national seminar of the Account Supervisory Committee (ASC) on Wednesday, Khatiwada stated that Nepal urgently requires second-tier regulation and supervision of the cooperative sector due to the emerging issues it faces.

The seminar, which commenced on Tuesday, was organised by the Nepal Federation of Savings and Credit Cooperative Unions Ltd (NEFSCUN).

Khatiwada criticised the fact that no agencies had taken responsibility to resolve the problems confronting cooperatives.

The former Finance Minister warned, “We will be pushed into a situation that requires external interference if we fail to undertake activities and resolve problems independently.” He reiterated that both accountability and autonomy are crucial in cooperatives. Anarchy leads to crisis, hence the necessity for second-tier regulation to eradicate anarchism. He mentioned that cooperatives face unique challenges that require legal solutions. He further argued that new problems have arisen since cooperatives started operating as financial companies.

On the occasion, Erin O’Hern, International Advocacy and Regulatory Counsel for World Council of Credit Unions (WOCCU), shared that strong account supervision of cooperatives is essential for their sustainability, and a capable workforce at ASC is equally important.

She stated that the account supervision committee should play a responsible role, in providing appropriate advice. She added that financial literacy, adherence to rules and regulations, and the credibility of members are other necessities in cooperatives. “Many countries have different practices. The Account Supervisory Committee is an independent body. The Committee has its own role and responsibility. Although ASC and the Board of Directors complement each other, ASC should be stronger than the Board of Directors”, she expressed. While presenting the working paper, Hern provided an overview of international practices on the supervision and regulation of cooperatives.