Lok Sabha Question No. 2675 (UNSTARRED), answered on 2025-12-16
Subject: Status of Ongoing Investigations in the Cooperative Sector in Kerala
Ministry: COOPERATION
Asked by: Shri Kodikunnil Suresh

## GOVERNMENT OF INDIA MINISTRY OF COOPERATION

## LOK SABHA UNSTARRED QUESTION No. 2675 TO BE ANSWERED ON 16 th  DECEMBER, 2025

## Status of Ongoing Investigations in the Cooperative Sector in Kerala

## 2675 Shri Kodikunnil Suresh:

Will the Minister of COOPERATION ( सहकारिता मंत्री ) be pleased to state:

- (a) the present status of ongoing investigations in the cooperative sector of Kerala, particularly in cooperative banks and credit societies;
- (b) the names of institutions under investigation, amounts involved, nature of irregularities and the agencies conducting the inquiries;
- (c) the number of officials identified, suspended or charge-sheeted and the current status of legal or disciplinary actions against them;
- (d)  whether  central  agencies  such  as  the  Enforcement  Directorate  (ED),  Central  Bureau  of Investigation (CBI), Income Tax Department or Registrar of Cooperative Societies are involved in these investigations and if so, the details thereof;
- (e)  the details of financial losses suffered by depositors or account holders and the measures taken for their refund or recovery; and
- (f)  the steps taken by the Government to strengthen regulation, transparency and accountability in cooperative institutions in Kerala to prevent such irregularities?

## ANSWER

## THE MINISTER OF COOPERATION सहकारिता मंत्री (SHRI AMIT SHAH)

(a) to ( e): Cooperative societies registered under the provisions of the Multi-State Cooperative Societies (MSCS)  Act, 2002 function as autonomous cooperative organisations and accountable to their members. The multi-State cooperative societies are required to function as per the provisions of Multi-State Cooperative Societies Act, 2002 and rules framed thereunder read  with  approved  bye-laws  of  the  Society  which  includes  the  roles  and  powers  of  the members, Board, General Body of the society and Central Registrar of Cooperative Societies (CRCS).

In  case  of  irregularities  in  the  functioning  of  multi-State  cooperative  societies,  the Registrar of Cooperative Societies of the State concerned and other agencies are requested to conduct inspection/inquiry of such societies under sections 108 and 78 of the MSCS Act, 2002. In Kerala State, 4 multi-State cooperative societies are under investigation. The information regarding investigation in the cooperative institutions, which are registered under the State Cooperative societies Act is not maintained by the Central Government.

- (f) To strengthen regulation, transparency and accountability in multi-State cooperative societies, the MSCS Act & Rules were comprehensively amended and notified on 03.08.2023 and  04.08.2023  respectively  by  supplementing  existing  legislation  and  incorporating  the provisions of Ninety-seventh Constitutional Amendment.

Many provisions have been introduced via the above amendment to bring transparency in the functioning  of  multi  state  cooperative  societies  and  prevent  financial  irregularities  therein, inter-alia: -

- i. To  ensure  timely,  regular  and  transparent  conduct  of  elections  in  the  multi-State cooperative societies, provision of Cooperative Election Authority has been made.
- ii. Appointment  of  Co-operative  Ombudsman  by  Central  Government  to  provide  a mechanism to address grievances of members.
- iii. To improve transparency, appointment of Information Officer by multi-State cooperative societies to provide information to members.
- iv. 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.
- v. Audit  reports  of  National  co-operative  societies  to  be  laid  in  Parliament  to  improve transparency.
- vi. Accounting and auditing standards for multi-State cooperative societies to be determined by Central Government to ensure uniformity in accounting and auditing.
- vii. To  improve  governance  and  transparency,  annual  report  of  multi-State  cooperative societies to include Board decisions which are not unanimous.
- viii. Central Government to determine prudential norms (liquidity, exposure, etc.) for multiState co-operative societies in the business of thrift and credit.
- ix. 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.
- x. Additional  grounds  for  disqualification  for  directors  have  been  made  to  improve governance.
- xi. 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.
- xii. To have more financial discipline and transparency, the board of multi-State co-operative societies to constitute Committee for Audit and Ethics alongwith other committees.
- xiii. For strengthening governance, criteria for appointment of Chief Executive Officer (CEO) stipulated.
- xiv. To enhance democratic decision making in the multi-State cooperative societies, quorum has been prescribed for board meetings.
- xv. Central Registrar to conduct inquiry if he gets information that business is being conducted in a fraudulent manner or for unlawful purposes.
- xvi. If registration obtained by misrepresentation, fraud, etc., provision for winding up of a multi-State cooperative society after giving opportunity of being heard.
- xvii. 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.

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