Lok Sabha Question No. 1606 (UNSTARRED), answered on 2023-12-12
Subject: Ease of Doing Bussiness in Cooperative Sector
Ministry: COOPERATION
Asked by: Pushpendra Singh Chandel

## GOVERNMENT OF INDIA MINISTRY OF COOPERATION

## LOK SABHA UNSTARRED QUESTION NO. 1606 TO BE ANSWERED ON 12/12/2023

## Ease of Doing Business in Cooperative Sector

## † 1606.  SHRI KUNWAR PUSHPENDRA SINGH CHANDEL:

Will the Minister of COOPERATION (सहकाįरता मंũी) be pleased to state:

- (a) whether provisions have been made for ease of doing business by the Cooperative Societies under the Multi-State Cooperative Society (Amendment) Act, 2023;
- (b) if so, the details of the provisions made thereunder; and
- (c) the benefits of the said provisions for the Members of the abovesaid Societies?

## ANSWER

## THE MINISTER OF COOPERATION सहकाįरता मंũी (SHRI AMIT SHAH)

(a) to (c): The Multi-State Cooperative Societies (MSCS) (Amendment) Act & Rules, 2023 have been notified on 03.08.2023 and 04.08.2023, respectively to strengthen governance, enhance transparency, increase  accountability  and  reform  electoral  process,  etc.in  the  multi-State  cooperative  societies  by supplementing existing legislation and incorporating the provisions of Ninety-seventh Constitutional Amendment.

Many provisions have been introduced via above amendment for ease of doing business by the MultiState Cooperative Societies, inter-alia:

- i. Provision  has  been  introduced  for  submission  of  applications,  returns,  reports,  statement  of accounts,  registersor  any  other  particulars  or  documents  and  returns  required  to  be  filed, notices,  any  communication  or  intimation,  required  to  be  served  or  delivered,issuance  of certificates of registration & amendment of bye-laws, fee, etc in digital form. This will promote ease of doing business through paperless processing.
- ii. Period  of  registrationof  new  multi-State  cooperative  societies  has  been  reduced  from  4  to  3 months  with  a  further  extension  of  2  months  on  the  request  of  the  applicant  to  rectify deficiencies. This will help in expediting and facilitating registration.
- iii. To ensure timely,  regular and transparent  conduct of elections in the multi-State cooperative societies, provision of Cooperative Election Authority has been included.
- iv. Provision of non-voting shares has been introduced to help Multi State Cooperative Societies in raising capital.
- v. Provisions for Investment of funds by the multi-State cooperative societies have been redefined to ensure safer investments and remove references to colonial era securities.
- vi. Deemed  de-registration  of  society  under  State  Act  upon  its  conversion  into  a  multi-State cooperative  society  without  any  need  to  obtain  further  orders  from  concerned  Registrar  of Cooperative Societies has been introduced to reduce processing time for such cases.

Also,  many  provisions  have  been  introduced  in  the  Multi-State  Cooperative  Societies  (MSCS) (Amendment) Act & Rules, 2023 to bring transparency in the functioning of cooperative societies and prevent financial irregularities therein, inter-alia: -

- i. Appointment of Co-operative Ombudsman by Central Government to provide a mechanism to address grievances of members.
- ii. To improve transparency, appointment of  Information Officer by  multi-State  cooperative societies to provide information to members.
- iii. Concurrent Audit has been introduced for Multi-State Cooperative Societies with turnover/deposits  of  more  than  500  crore  rupees  from  a  panel  of  auditors  approved  by Central Registrar. Concurrent audit will ensure early detection of fraud or irregularities, if any,  and  accordingly  prompt  course  corrections  can  be  made.  Following  two  panels  of auditors for Multi-State Cooperative Societies have been notified for financial year 202324:
- 1) Panel  of  auditors  for  multi-State  cooperative  societies  having  an  annual  turnover/ deposit  (as  the  case  may  be)  of  up  to  five  hundred  crore  rupees  for  carrying  out Statutory Audit.
- 2) Panel  of  auditors  for  multi-State  cooperative  societies  having  an  annual  turnover/ deposit (as the case may be) of more than five hundred crore rupees for carrying out Statutory and Concurrent Audit.
- iv. Audit reports of Apex multi-State co-operative societies to be laid in Parliament to improve transparency.
- v. Accounting and auditing standards for multi-State cooperative societies to be determined by Central Government to ensure uniformity in accounting and auditing.
- vi. To improve governance and transparency, annual report of multi-State cooperative societies to include Board decisions which are not unanimous.
- vii. Central  Government  to  determine  prudential  norms  (liquidity,  exposure,  etc.)  for  multiState co-operative societies in the business of thrift and credit.
- viii. To curb nepotism and favouritism in multi-State co-operative societies, the Director of a multi-State cooperative society shall not be present in the discussion and vote on matters where he or his relatives are an interested party.
- ix. Additional grounds for disqualification for directorshave been made to improve governance,  for  better  recovery  of  dues  and  to  ensure  that  such  acts  of  omission  or commission or fraud are not repeated elsewhere.
- x. To have more financial discipline and transparency, the board of multi-State co-operative societies to constitute Committee for Audit and Ethics amongst other committees.
- xi. For strengthening governance, criteria for appointment of Chief Executive Officer (CEO) stipulated.
- xii. To enhance democratic decision making in the multi-State cooperative societies, quorum has been prescribed for board meetings.
- xiii. Central Registrar to conduct inquiry if he gets information that business is being conducted in a fraudulent manner or for unlawful purposes.
- xiv. If  registration  obtained  by  misrepresentation,  fraud,  etc.,  provision  for  winding  up  of  a multi-State cooperative society after giving opportunity of being heard.
- xv. To  discourage  members  from  acting  against  collective  interests  of  the  multi-State  cooperative societies,  the  minimum period of expulsion of an expelled member of  a multiState co-operative society has been increased from 1 year to 3 years.
- xvi. To prevent a few members only benefitting from resources of the society, Institutions with majority equity shares held by the members of multi-State co-operative societies or their relatives, would not be considered as subsidiary institution.

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