Nepal Cooperative Crisis: Problematic Cooperatives List & Depositor Refunds

Nepal's cooperative crisis refers to the collapse of dozens of savings-and-credit cooperatives that took deposits from ordinary members and then failed to return them. Cooperatives (sahakari) are member-owned financial institutions registered under the Cooperatives Act, 2074 BS (2017 AD). The country has roughly 30,000 registered cooperatives serving more than seven million members, with sector-wide deposits reported in the range of Rs 478 billion, making them a major, lightly regulated part of household finance. When management diverted members' savings into private businesses, real estate and related companies, many institutions became unable to honour withdrawals.

The scandal became a national issue from around 2023-2024, when tens of thousands of depositors began protesting after being unable to access their money. A Parliamentary Special Committee (PSC), chaired by Surya Thapa, was formed on 28 May 2024 and released a report of about 2,000 pages in September 2024, describing systematic fraud carried out through fake documents and misleading financial reports. Parliamentary and investigative bodies have documented figures for direct embezzlement running into the tens of billions of rupees across dozens of institutions.

The victims are overwhelmingly small savers: retirees, small farmers, homemakers, daily-wage workers and small traders who parked their life savings in cooperatives promising higher interest than banks. Because most cooperatives are not covered by deposit insurance and are regulated by the under-resourced Department of Cooperatives (under the Ministry of Land Management, Cooperatives and Poverty Alleviation) rather than Nepal Rastra Bank, depositors had little protection when the institutions failed.

Under the law, a cooperative can be formally declared 'problematic' (samasyagrasta) when it fails to meet its financial obligations, refuses to return members' deposits on demand, and does not comply with an approved action plan to fix its problems. As of 2026, the federal government has designated more than 20 cooperatives (reported around 23) as problematic, with several more recommended for designation. These declarations bring a cooperative under a management committee that freezes normal operations, verifies claims and attempts asset recovery.

The most notorious cases dominate the crisis. Oriental Cooperative was one of the earliest to collapse, first declared crisis-ridden in 2017; it is linked to failed returns of deposits reported at well over Rs 6 billion and thousands of claimants, hundreds of whom reportedly died waiting for their money. Civil Savings and Credit Cooperative, associated with former lawmaker Ichchha Raj Tamang, is tied to embezzlement figures reported around Rs 8 billion. Sumeru Cooperative of Pulchowk, Lalitpur, chaired by Bharat Maharjan, allegedly involved deposits from roughly 35,000 savers, with much of the money siphoned into private companies; Maharjan is reported to have absconded, with a red notice issued via Interpol.

Swarnalakshmi (Swarnalaxmi) Multipurpose Cooperative is central to the 'Gorkha Media' web of fraud, in which chairman Gitendra Babu (GB) Rai is accused of diverting funds from several cooperatives, including Suryadarshan, Sahara (Chitwan) and Supreme (Butwal), into a media empire. Investigations describe hundreds of millions of rupees illegally routed to Gorkha Media Network. Because official lists are updated as new institutions are designated and settlements are completed, depositors should always confirm a cooperative's current status with the relevant management committee or provincial cooperative office.

The scale is large but the headline figures vary by source and by how they are counted. As of 2026, the Problematic Cooperative Management Committee reported that roughly Rs 46 billion belonging to nearly 76,000 depositors of federally-declared problematic cooperatives still needs to be returned. Broader estimates of total sector-wide embezzlement, including cooperatives not yet formally designated and unrecovered loans, are considerably higher, with parliamentary and investigative sources citing figures in the tens of billions of rupees.

The committee has classified depositors by the size of their savings, which determines the order in which they are repaid. Depositors with savings below Rs 500,000 are treated as 'small depositors' and are prioritised, while those above Rs 500,000 are 'large depositors.' Of the total, around 58,000 are small depositors and roughly 18,000 are large depositors. Within the small category, tens of thousands hold very modest sums — reported breakdowns include around 17,000 depositors with under Rs 25,000 and tens of thousands more up to Rs 100,000.

These numbers cover only the cooperatives that have been officially brought under management. Many affected savers in cooperatives that are not yet formally declared problematic are not counted in the Rs 46 billion figure, which is one reason the government has kept opening new claim windows for previously unregistered victims. Depositors should treat all totals as indicative and periodically updated rather than final.

When a cooperative is declared problematic, the government places it under a management committee (samiti) tasked with taking over the failed institution, verifying depositor claims, recovering loans and assets, and distributing whatever can be recovered. A dedicated federal-level Problematic Cooperative Management Committee, overseen by the Ministry of Land Management, Cooperatives and Poverty Alleviation, now coordinates this work for the biggest cases, while some provinces (notably Bagmati, which hosts the most cooperatives) have their own management offices.

The committee's core functions are to authenticate each depositor's documents and claim, prevent duplicate claims, sell or auction the cooperative's assets, pursue recovery from borrowers and from directors or staff accused of wrongdoing, and channel recovered funds into refunds. Claims are processed under the deposit-return provisions of the Cooperatives Act, 2074 BS, and depositors must register their claims and provide supporting documents to be included in a refund cycle.

In practice the process has been slow and contested. Some cooperatives have disputed their 'problematic' designation in court, asset recovery from absconding operators has been difficult, and the sheer number of institutions and claimants has strained the committee's capacity. This is why the government introduced a dedicated revolving fund in 2026 to accelerate at least the smallest refunds rather than waiting for full asset liquidation.

To speed up repayments, the government published the 'Procedures for the Establishment and Operation of the Revolving Fund for Returning Savings of Members of Troubled Cooperative Institutions, 2026' in the Nepal Gazette on 27 April 2026. The mechanism draws on the government's policies and programmes and budget for fiscal year 2025-26 and followed a Supreme Court order issued on 25 January 2026 directing the state to act. The Ministry of Finance released Rs 250 million as initial seed funding.

The revolving fund is designed to be topped up continuously so it can keep paying out. Its sources include direct government allocation, proceeds from auctioning cooperative assets, amounts recovered from borrowers, and money recovered from officials and directors accused of financial irregularities. By mid-2026 the fund reportedly held around Rs 600 million — the Rs 250 million government contribution plus roughly Rs 350 million recovered through savings reconciliation and loan repayments.

Refunds are being made in phases, smallest first. The first phase fully repays depositors with balances up to Rs 10,000, a threshold intended to clear the largest number of the poorest savers quickly. In the first tranche in May 2026, the committee reported refunding about Rs 1.4 million to 378 small depositors across cooperatives such as Kantipur, Pashupati and Shiva Shikhar. Subsequent phases are meant to raise the ceiling as more money is recovered, moving up toward the Rs 500,000 small-depositor line. Repayments are made to depositors' bank accounts after their claims are verified.

Depositors of a declared problematic cooperative recover money by registering a verified claim with the relevant management committee, not by dealing with the failed cooperative directly. The committee requires proof of deposit — passbooks, receipts, account statements and identification — to authenticate each claim and prevent duplication. Because refunds are paid in phases by deposit size, small depositors are repaid first, so registering promptly and keeping documents in order is essential.

Repayments so far have been partial and gradual, funded by whatever the committee can recover and by the revolving fund's balance. There is no guarantee of full repayment, and larger depositors in particular may recover only a portion over a long period as assets are liquidated and legal cases proceed. The government has periodically opened fresh claim windows — for example for previously unregistered or missed victims — so depositors who were left out of earlier lists should watch for new registration deadlines.

Because details, thresholds and deadlines change as the process advances, depositors should rely on official announcements from the Problematic Cooperative Management Committee, the Ministry of Land Management, Cooperatives and Poverty Alleviation, and their provincial cooperative office rather than on rumours or intermediaries offering to recover money for a fee. This page summarises publicly reported figures for orientation only and is not legal or financial advice.