Nepal's cooperative revolving fund: what the Rs 5 lakh line and the Rs 25 crore seed really mean for your refund

A relative in Kalanki has Rs 1.8 lakh in a savings and credit cooperative that was declared problematic years ago. When the news broke in April that the government had set up a fund to return savings "up to Rs 5 lakh," she rang to ask which bank the money would land in. It was a fair reading of the headline. It was also the wrong one.

The revolving fund (चक्रीय कोष) is real and it is paying people. But Rs 5 lakh is a queue position, not a promise. The fund holds about Rs 65 crore against roughly Rs 46 billion owed. Whether you see your money in 2027 depends on which side of that line you sit and how much the committee recovers from the people who emptied your cooperative.

What was actually gazetted

The rules sit in one document: the procedure for establishing and operating a revolving fund to return savings to members of problematic cooperatives, 2083, issued by the Ministry of Land Management, Cooperatives and Poverty Alleviation and published in the Nepal Gazette in late April 2026.

Its key clauses, as reported by Ratopati and the Kathmandu Post:

Within the small-saver group, the committee may push single women, people over 60, Dalit and Janajati members and persons with disabilities further up the line. Arthatantra adds people with life-threatening illnesses. Heirs of deceased depositors are paid too, which is one more reason to keep the paperwork described in the claiming assets after a death guide in order.

Directors, managers, audit-committee members and their household family are held back if they were involved in the misappropriation. Anyone with a case pending in court waits for the verdict.

The Rs 5 lakh promise and the Rs 5 lakh rule are different

This is the part most people miss. Two documents use the same number in different ways.

The Good Governance Roadmap released on 30 March 2026 said depositors with up to Rs 5 lakh would be repaid first, and promised to guarantee that return "even if recovered assets fall short," issuing cooperative bonds if needed.

The gazetted procedure a month later keeps the priority and drops the guarantee. Clause 5(10) says a short fund pays pro-rata. The FY 2083/84 budget speech, in paragraph 60(h), says refunds will continue through an "Integrated Depositor Protection Fund, established as a revolving fund, to be reimbursed through cooperative savings and the sale of cooperative assets." It names no rupee amount and no Rs 5 lakh figure.

So the legal position today is priority without protection. If you read "up to Rs 5 lakh guaranteed" anywhere, it is quoting the roadmap, and the roadmap is a political document. The procedure is the one the committee pays from.

It also helps to compare this with a bank. At a bank or finance company, Rs 5 lakh is the amount the Deposit and Credit Guarantee Fund insures automatically, funded by premiums the institution paid in advance. At a cooperative, nothing was paid in advance. The fund is being built after the collapse, out of whatever can be clawed back.

Where the Rs 65 crore came from

The government's contribution is smaller than the headlines suggest. The Kathmandu Post reported that the FY 2082/83 budget allocated Rs 250 million under recurrent expenditure as the initial deposit, and that the procedure does not fix the fund's total size.

One awkward detail: in late May, a committee press release said the revolving fund had "not yet been established and operated" and that government money had not been paid to any saver. The refunds up to then came from recovering cooperative loans. October reporting says the Rs 25 crore has been released (निकासा). No source I found confirms that state money has reached a depositor's account yet.

The FY 2083/84 budget names the fund but gives it no fresh allocation in the speech. A June myRepublica report quotes the ministry citing about Rs 50 crore for refunds "this fiscal year," which does not match the Rs 25 crore elsewhere. Treat the government's share as Rs 25 crore until a Red Book line says otherwise.

The phase schedule

When payouts started on 19 May 2026, the Kathmandu Post laid out the plan the committee announced:

The stated aim was to return savings up to about Rs 5 lakh within a year. The schedule has already drifted. By August, eKantipur described phase 2 as balances up to Rs 25,000, and reported per-person payments ranged from Rs 25,000 at Kantipur to Rs 12,600 at Pacific. The phases are committee practice, not text in the gazetted procedure, so they can change again.

For someone like my relative with Rs 1.8 lakh, the realistic reading is a first instalment capped at a few tens of thousands, then further 50% slices as later phases open, each one dependent on recoveries.

How fast is it actually moving?

The committee chair said at launch the aim was to verify and process at least 500 applications a day. Here is what has been reported since.

The October figure mixes cash with loan set-offs, so it is not comparable to the cash-only figures from May to August. The headcount is the cleaner measure.

Some calculations from those figures, mine rather than the committee's:

• Pace. About 11,000 depositors in roughly 164 days is near 67 a day, well under the 500-a-day target.
• Coverage so far. 11,000 out of about 76,000 is roughly 14% of depositors touched at least once.
• Fund vs debt. Rs 65 crore against Rs 46 billion is about 1.4%. The government's Rs 25 crore alone is about 0.5%.
• The small-saver group alone. The Kathmandu Post's breakdown counts 21,619 depositors holding between Rs 1 lakh and Rs 5 lakh. Each is owed at least Rs 1 lakh, so that band alone is owed at least Rs 216 crore, more than three times the entire fund.

That last line is the one to sit with. Even if every rupee in the fund went to small savers, it could not pay the Rs 1 lakh to Rs 5 lakh band in full. The fund only works if recoveries from borrowers and directors keep coming, which is exactly the slow, court-heavy part.

The 500 cooperatives outside the line

The fund pays members of cooperatives the federal government has formally declared problematic. That was 23 as of late October 2026, three of which have been fully settled. The National Cooperative Regulatory Authority has recommended 16 more, according to the Kathmandu Post, with 12 others at the final stage.

The victims' federation counts about 500 cooperatives that have failed to repay. If yours is one of the 480-odd undeclared ones, the revolving fund does not reach you at all. Your route is the registrar complaint path covered in the problematic cooperative refund guide, and pressure to get the cooperative declared.

Depositor groups are not satisfied. Nagarik reported in late October that some depositors had received only up to Rs 5,000. The minister, Pratibha Rawal, has said the government "will not abandon victims." No full-repayment timeline exists.

What to do this month

You cannot speed up recoveries. You can make sure you are not the reason your own payment stalls.

1. Update your details before the end of Kartik. A notice dated 19 Asoj 2083 asks claimants to update mobile number and details on the committee's system, confirmed by OTP, by the end of Kartik 2083. Approved amounts go out through the National Payment Gateway, and a dead SIM can block an OTP.
2. Check the bank account name matches your citizenship. Clause 5(1) allows bank transfers only. Fix any spelling mismatch between your passbook, citizenship and bank KYC before your phase opens, not after.
3. Settle or document any loan you owe the same cooperative. Your savings will be netted against it first. If the cooperative's ledger shows a loan you repaid, gather the receipts now.
4. If you hold money in more than one problematic cooperative, expect to be paid through one of them. Arthatantra reports the committee starts with the one holding your lowest balance.
5. Watch coopmc.gov.np notices, not Facebook groups. The committee posts its claim notices and procedures there.

How to plan around a refund you cannot schedule

Treat the stuck balance as a long-dated, uncertain receivable, not as savings. In practice:

• Do not count it in your emergency fund. Rebuild that separately in a bank or finance company account covered by deposit insurance.
• When an instalment arrives, decide in advance where it goes. Putting it into an insured bank FD or paying down a costly loan beats parking it back in another high-rate cooperative. The 13% cooperative FD post covers why those rates exist.
• If you are over 60 or support someone who is, mention it on the claim. Age is one of the listed priority categories.

What you actually need to know

1. Rs 5 lakh is a priority line, not a guarantee. The gazetted procedure pays small savers first but goes pro-rata if the fund is short. The guarantee language lives only in the March roadmap.
2. The fund is small and mostly self-funded. About Rs 65 crore, of which Rs 25 crore is the government's, against Rs 46 billion owed. Payouts depend on recoveries from borrowers and directors.
3. Your job is paperwork. Update your mobile and details by the end of Kartik, make sure your bank account matches your citizenship, and settle any loan you owe the same cooperative.

Stuck in a declared cooperative and unsure where your claim stands? Email parjanya57@gmail.com with the cooperative's name and your balance band.

This post is part of the Nepal Money Basics guide, in the Protect what you've saved section.