POKHARA: Cooperatives based in Kaski district are making huge investments in the real estate sector.

The sector accounted for 30 percent of their total investment of Rs13.44 billion in fiscal year 2014-15, according to the Cooperative Division Office, Pokhara .

The cooperatives carried out transactions worth Rs31 billion in review period. Their deposit mobilisation stood at Rs13.03 billion (up Rs4 billion year-on-year), while credit disbursement rose to Rs13.44 billion from Rs9.85 billion.

The division office’s chief Badri Nath Adhikari said most of the cooperatives were investing in unproductive businesses. “With such a poor investment portfolio, many of these cooperatives are also facing excess liquidity situation,” he said.

The cooperatives’ investment areas, besides real estate, are trading, hire-purchase and agriculture.

As per the regulation, cooperatives cannot invest more than 25 percent of their total lending to the realty business. “With a major focus on real estate, these cooperatives have failed to promote entrepreneurship in the region,” he said.

There are 599 cooperatives are operating in the region, but they have provided jobs to a mere 1,700 individuals. “Had they focused on productive businesses, they would have created employment opportunities to an additional 10,000 people,” Adhikari said.

With poor government policy, increasing population, growing business and being one of the major tourism destinations, people in the district are increasingly getting attracted towards cooperatives for financial services.

Amid such a boom, the cooperatives are reported to have been doing transaction with non-members and people from outside their working areas. This has put the general people’s deposits at risk.

Ravi Raman Tiwari, president of Kaski District Cooperative Association, said there are no authentic data of the cooperatives’ investment portfolio. “Although they are increasing their investment in the agro business, they should not limit their investment in one or two servitors,” said Tiwari, admitting many of the cooperatives are doing transaction with non-members and those from outside their working areas.

Of the total cooperatives in Kaski, 338 are savings and credit cooperatives, and 136 are related to agriculture, fruits and small farmers. These cooperatives have 184,954 members in total.

As of the last fiscal year, their share capital stood at Rs4.07 billion.

Source: The Kathmandu Post, 30 july 2015