Before 1990s cooperatives used to play important role in Delivering inputs and seeds, providing markets for agriculture products, providing financial services, providing markets for milk associated with rural economy:
With growing privatization since 1990s, the role of providing inputs, seeds and market for agriculture products, especially in the pure-urban areas, have been assumed by the private entrepreneurs from the cooperative sector. Yet, cooperatives are providing such services significantly in the rural areas.
The recent budget speech (fiscal year 2005/06) of the Finance Minister includes implementing 150 small irrigation projects through cooperatives.
The financial services and dairy business remains the stronghold of cooperatives in the rural areas. Both the finance and milk sectors of cooperatives are the prime sectors that have helped cash inflow into the rural areas. Be it through the inter-lending program of Nepal Federation of Savings and Credit Unions (NEFSCUN) or Rural Self Reliance Fund (RSRF) the savings and credit cooperatives have been able to access external sources of loan to on-lend to their members.
Challenges of the cooperative sector and recommendation to overcome them. The challenges identified are mostly too general and focused on what the government should do. The challenges identifies in this thesis include but not limited to: Confusion in national vision of cooperative sector, Lack of identity of cooperatives, Lack of professionalism, Lack of investment in this sector, Too small membership to gain economy of scale, Lack of credibility, Lack of capacity of government to monitor.
But within last decade it has been able to reach the rural areas significantly. Out of 2,829 Saving and Credit Cooperatives registered in the country, 453 were members of NEFSCUN as of Jan 2007.
Cooperative development in Nepal still continuous, however it was on the way of grand success. It is increasing gradually cooperative movement as one of the primary land credit; society is being popular among rural people.
The overall summary of this study can sumarise breiefly as follows:
Governments of Nepal have always been closely involved with cooperatives, have had a policy for their development and growth, and have had special arrangements to provide capital and credit to them.
The basic principle of different plans has given a prominent place to the KISCCU societies for the systematic and institutional growth of the rural economy by providing agricultural equipments business support, health improvement promoting the small and cottage industries. By the year 2005/06 of the tenth plan 8979 cooperative were in operation in 75 districts with 2587480 members having nearly 700 million share capitals with 850 million loans. KISCCU was established for the sustainable economic growth program around Gaindakot.
KISCCU is one of the 2928 saving and credit institutions that have registered as cooperative union in Nepal. It was registered in 1996 under the co-operation Act in district co-operative office, Nawalparasi. The members of the VDC are of different casts. Most of them are engaged milk production, (agriculture) and business and some employed in offices. Agriculture is their main occupation and income source. Business and milk production is the main economic potentialities of Gaindakot. The total numbers of members of KISCCU were 1010 (in December 2006) and total share capital was Rs. 1362900 with loan of Rs. 66496432. The impact of the establishment of KISCCU on its member is that they felt a sense of economic safety. Because 70% respondents members reported that KISCCU has provided productivity loan which saved their unnecessary expenditure and improving saving in nature but 15% are not satisfied it.
Almost 99% members are satisfied with the functioning of KISCCU. 18% members are taken loan regularly and other 81% are taken sometimes. It is good that only one percent is not taken loan.
It was found that 60% members were taken loan from KISCCU to save high rate of interest and easy to take 40% for security and to save time and others. Nearly 70% members are found to support them to improve economic life. Other 15% said that it does not improve economic life and 15% does not know about that.It was found those 85% members are taking loan from KISCCU, 10% relatives, 5% both.
The total deposited amount was increasing per year. In year 1996/97 it was Rs. 48242 but in years 2005/06 and 2006/07 it was Rs. 11386508 and 19073295 respectively. Saving amount is increasing every year but KISCCU have not future long term plan about the amount. The total saving amount till the FY 2006/07 is Rs. 19073295 and total lending amount is Rs. 9026053. 100 members were deposit in every day in daily saving, at least Rs. 10. 1088 members deposit at least Rs. 50 per month, 262 members deposit at least Rs. 30 in khuturke saving, in Nabalak were 212 member and other 266 deposit in optional saving.
The union provides loan to its members with a minimum interest rate to run their various income generating programs. It provides two types of loan to its members with a minimum interest rate to run their various income generating programs. The interest rate were 7% in monthly saving, 8% in Nabalak, 5% in daily, 5% in Khutukre, 5% in optional and 7% in micro saving for deposited amount. It provides tow types of loan to its members-productive and unproductive loan. (i.e. 75% and 25% respectively.) The lending trend from KISCCU to their member is increasing. In first year only 32 (with Rs. 411250) member were taken loan but the last two year the member were 158 and 169 with Rs 6329500 and 9026053 respectively. The creditors did not return 57% of the loan taken from this union. Hence KISCCU could not use all of its capital in other profitable functions.
The total income is being increasing in year 1997/98 it was Rs. 55766, and Rs. 1399532 in year 2005/06.The limitation of loan is Rs. 150000 for one member and Rs. 5000 without deposit/ witness is provided. The members who pays in interest regular, the special discount in interest rate is given i.e. 10% monthly, 7% in tow month and 5% in quarterly.
The union has in profit till Dec. 2006. The profit amount is Rs. 884631. The profit is increasing every year. The profit is distributed among different types of fund in different % i.e. 25% of total profit in reserve fund. Other 75% is divided in other seven funds, i.e. Dividend (20%), security fund (50%), employment bonuses, institution development fund, cooperative education fund, loss recoverable fund (5% respectively) and bad debt (10%).