The co-operatives in the country are governed by a number of laws but when it comes to compliance, the situation has been lax. That according to the Institute of Companies Secretaries (ICSI) could change if their proposals are accepted. | |
| "We are meeting the chief secretary of Gujarat to give our proposal of amending the state act to provide for professionals to check for legal compliance at the co-operatives." Mahesh Athavale, president of ICSI, told Business Standard. ICSI plans to approach all the major state governments in this regard. |
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| As of now, there is no provision in the laws governing co-operative societies for appointment of independent professionals to check legal compliance, Athavale said. |
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| "We are initially approaching the governments of Gujarat, Maharashtra and Uttar Pradesh as the concentration of co-operatives is high in these states," he added. |
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| As per ICSI's proposal, the compliance officer who would have to be a company secretary would maintain legal records, check distribution of dividends, verify borrowings, conduct elections and oversee the conduct of meetings of management on a regular basis. |
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| ICSI has also proposed for a compliance audit for co-operatives. Lack of effective regulation of the co-operatives has resulted in various scams taking place including the stock market scam of 2000 where customers of Madhavpura Co-operative Bank and City Co-operative Bank lost money. |
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| "While the Reserve Bank of India is tightening the norms related to co-operative banks, there is a need for a compliance officer in co-operatives so that there are no lapses," Athavale said. |
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| ICSI is suggesting a threshold limit of Rs 5 crore turnover for coverage by this regulation. |
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| The concentration of co-operatives in the banking and textile sector is high and these sectors are also expected to witness fast growth. Preventive regulation is therefore essential, he elaborated. |
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| With this proposal, ICSI is also seeking to increase the ambit its operations. |
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| The Centre had set up a task force in August under A Vaidyanathan to recommend an action plan to suggest appropriate regulatory framework for the co-operatives and revitalise rural co-operative banks. The report is expected by end of this month. |
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| Co-operatives, other than multi-state co-operatives, are governed by the various state laws. They also have to comply with tax laws, infrastructure related laws, labour laws and environment laws. |
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