Maharashtra to set up regulator to rein in non-agri coop societies

The Maharashtra government plans to set up a regulatory body to contain white-collar crimes involving the board of directors and members of the non-agricultural cooperative societies in urban and rural areas.

The state government, under new Chief Minister Prithviraj Chavan, would amend the Maharashtra Cooperative Societies Act of 1960 to make sufficient provisions in this regard. The proposed regulatory body would be delegated powers similar to the Reserve Bank of India.

The regulatory body would be delegated sufficient powers to regulate the functioning of such societies.

State Cooperation Minister Harshvardhan Patil told Business Standard: “Such a regulatory body is proposed in the wake of incidents of misappropriation of funds and violation of the Maharashtra Cooperative Societies Act, 1960, by various non-agricultural cooperative societies in the state. They had granted loan simply on an applicant’s plea. Punitive action would be taken against the board of directors, members and beneficiaries who have violated all stipulated norms.”

As on March 2009, there are 17,278 cooperative societies in Maharashtra with a record membership of 11.4 million and deposits worth Rs 13,812 crore. These societies had disbursed loans worth Rs 11,406 crore and the outstanding is of the order of Rs 3,305 crore. Patil said since April 2009 the government has not granted the permission for such new societies nor it had approved an increase in the working jurisdiction of the existing ones.

Of the 17,278 societies, 469 are in big financial trouble. The amount involved in such doubtful societies is of the order of Rs 1,632 crore with 701,000 members. “Societies have landed in financial trouble due to mismanagement by the board of directors, disbursement of loan to the board of directors and their relatives in violation of rules. Besides, these societies had committed serious economic offences by using deposits to strike land deals and illegal investments. Thus, to rein in the societies, the government has proposed an amendment. We expect to seek passage of the Bill in the ensuing session of the state legislature, beginning on December 1,” Patil informed.

According to the minister, the home ministry has agreed to extend its cooperation to step up action against the societies engaged in misappropriation and mismanagement. So far, offence has been registered against 144 such societies and 2,112 persons. The government has recovered Rs 254.19 crore from those societies.