Realignment Of Laws Set To Prop Co-Operatives

The co-operative sector in the country is set to be strengthened and reinvigorated, once all the states realign their respective co-operative laws in sync with the Multi-State Co-operative Societies Bill, 2000. This is because the Bill contains measures aimed at introducing the principles of corporate governance in the sector, experts from the co-operative sector said.

Majority of the institutions in the co-operative sector are characterised by financial misdemeanors and lack of transparency, and the Bill seeks to tackle these issues, they added.

The Bill, introduced in the ongoing winter session of Parliament by the Union agriculture minister, aims at consolidating and amending the law relating to co-operative societies, with objects not confined to one state and serving the interests of members in more than one state.

Further, the Bill facilitates the voluntary formation and democratic functioning of co-operatives in the country as people's institutions based on self-help and mutual aid and appeals & review.

The country has the largest network of co-operatives in the world, and the Bill seeks to confer autonomy and self reliance on the 5.04 lakh co-operative societies having a total membership of 20.91 crore (1999-2000).

The Bill deals with, among others, the functioning of the central registrar and the registration and functioning of multi-state co-operative societies (MSCS), members of MSCS & their duties, rights & liabilities, direction, management & privileges of MSCS, property & funds of the societies, audit, inquiry, inspection & surcharge; settlement of disputes; winding up of the MSCS, execution of decrees, orders & decisions.

"All the states will do well to amend their co-operative laws in line with the Bill. The ills afflicting institutions in the sector, such as the board of directors not being qualified, the directors and their kin taking loans from the co-operative institutions in gross violation of norms, lack of professional management, absence of human resources management/policy, and no business plan, could be addressed to some extent once the Bill is enacted," R Chandrasekharan, managing director of the Maharashtra State Co-operative Bank, said.

Once the states amend their laws, the co-operative banks and societies will also have to follow suit and amend their bylaws, he said. "It is high time the Augean Stables are cleaned. Many of the institutions in the co-operative sector are making losses, and amendments to their bylaws in line with the Bill could nurse them back to financial health," Chandrasekharan said.

He added that the Bill, aimed at providing more functional/ financial autonomy and democratic management of co-operatives through legislative support, could spur the co-operative societies to convert themselves into public or private limited companies.

A veteran co-operative banker, pointed out that currently elections in a co-operative body are held by show of hands. He said, when a few hundred people attend the general body meeting of a co-operative institution, it becomes difficult to assess the voters in favour of a particular resolution and those against and the Bill will address this issue.