5. ROLE OF REGISTRAR OF COOPERATIVE SOCIETIES.docx

8/10/2019 5. ROLE OF REGISTRAR OF COOPERATIVE SOCIETIES.docx

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ROLE OF REGISTRAR OF COOPERATIVE SOCIETIES

Right from the Registration of a Cooperative Society till the cancellationof its registration, the Registrar acts as friend, philosopher and guide tothe cooperatives and ensures that Cooperative Societies function in

accordance with the Cooperative Act. In fact the Registrar is "Trimurti" ofthe Cooperative movement. The main functions of the Registrar are asunder :

1. Registration of Cooperative Societies;2. Registration of amendments in the Bye-laws of Cooperative Societies;3. Amalgamation, Division and re-organization of Cooperative Societies;4. Ensure timely Election of the Managing Committee in Cooperative

Societies;5. Conduct elections of Managing Committee in primary cooperative

banks and federal cooperative societies;6. Ensure proper investment of funds by Cooperative Societies as

per Act and Rules ;7. Conduct audit, order inspection, enquiry and also fixing

surcharge on negligent functionaries of cooperative societies;8. Settle disputes of Cooperative Societies through the process of

arbitration.9. Function as an appellate Court;10. Enforcement/execution of Orders, Awards and Decrees of various Courts;11. Order winding up and cancellation of registration of defunct/non-

functional societies.12. Operating Cooperative Education Fund for training, education,

propaganda and publicity programme for the development ofCooperative Movement in the NCT of Delhi .

13. To frame/amend Delhi Cooperative Societies Rules, 1973 from time to

time.14. Issue Instructions/directives for the promotion of business ofdifferent type of Cooperatives ;

15. To approve proposals for enrolment, resignation and cessation ofmembership in Housing Cooperative; and

16. To frame, execute and monitor various beneficiary schemesapproved by the Central /State Govts, including financialassistance to various sectors of Cooperatives.


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Role of RBI / NABARD and Co-operative Banks in Promoting Rural Credit

by GC Sen Banking

Role of RBI / NABARD and Co-operative Banks in Promoting Rural Credit !

Though the co-operative credit movement was made a special responsibility of the MI right from thelatters birth in 1935, much was not accomplished in this sphere till about the mid - 1950s. The realturning point in the Banks role in the movement came only after the Banks All -India Rural Credit SurveyCommittee submitted its monumental report in 1954.

The Survey Committee had found that while the co-operative societies and government provided only3% each of the loans raised by the cultivator . The moneylender changed very high rates of interest anddid not concern himself with the purpose of the loan.

The Survey Committee summed up the position of agricultural credit thus It fell short of the rightquantity, was not of the right type, did not serve the right purpose and often failed to go to the rightpeople It also said that co -operation had failed but cooperation must succeed.

For this success, the Survey Committee recommended an integrated scheme of rural credit, of which

the main features were:

(i) State partnership in co-operative credit institutions through contribution to their share capital ;

(ii) Full co-ordination between credit and other economic activities especially marketing andprocessing; and

(iii) Administration through adequately trained and efficient personnel, responsive to the needs of therural population .

The RBI was assigned a crucial role in the scheme of integrated credit and in the building up of the co-operative credit organization . The consequent steps taken by the RBI in pursuance of therecommendations of the Survey Committee and later committees like the Committee on CooperativeCredit (1960) transformed the Banks role from that of a conventional central banker to that of an activeagency that takes all necessary measures for enabling the co-operative system to provide a growinglylarger share of rural credit.

The adoption of special programs for increasing agricultural production and the spread of greenrevolution based largely on intensive use of fertilizers, water, better seeds, and machine power haveenhanced the RBIs responsibilities further. The RBI had also started offering greater financialassistance to co-operatives for credit facilities to small farmers and other weaker sections and forminimising disparities in the flow of credit to various regions.
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(iv) Non- agricultural finance:

The NABARD also provides short- term finance for:

(i) The production and marketing activities of selected cottage and small-scale industries (mostly

handloom weavers co -operative societies) and

(ii) The purchase and distribution of fertilizers.

The loans are generally provided through SCBs against guarantees of the state governments . However,all such finance has constituted a small proportion (5 to 7 per cent) of the total Reserve Bank short-termfinance to cooperatives: the bulk of it goes to agricultural co-operatives.

During 1994-95, the total amount of financial assistance sanctioned by NABARD was about Rs. 5,300crore. Of this, about Rs. 4,800 crore were short-term credit and Rs. 500 crore were medium-term credit.The outstanding amount of financial assistance was about Rs. 3,700 crore.

(B) Building up of the Co-operative Credit Structure:

From around 1951 the RBI made efforts to (a) strengthen the co-operative credit structure at all thethree levels and (b) reorient the operational policies of cooperative banks in more purposive directions.Under the former, the RBI had taken steps to get SCBs established in such states that did not havethem and strengthen them where they were weak . The RBI had also tried for the rehabilitation ofweak CCBs by prescribing action to recover over dues, strengthen the bad debts reserves and improvethe quality of the administrative and supervisory staff.

Similarly, the Bank played an active role in the reorganization of primary societies. The Bank had also

made arrangements for the training of personnel of co-operative departments and institutions andundertaken periodical inspection of SCBs, CCBs, and SLDBs to promote healthy and sound growth of co-operative banking in the country. All these functions are now being performed by the NABARD.

EVOLUTION OF COOPERATIVES IN INDIA

The cooperative movement in India owes its origin to agriculture and allied sectors . Towards theend of the 19th century, the problems of rural indebtedness and the consequent conditions of farmerscreated an environment for the chit funds and cooperative societies . The farmers generally found thecooperative movement an attractive mechanism for pooling their meagre resources for solving common

problems relating to credit, supplies of inputs and marketing of agricultural produce . The experiencegained in the working of cooperatives led to the enactment of Cooperative Credit Societies Act, 1904 .Subsequently, a more comprehensive legislation called the Cooperative Societies Act was enacted. ThisAct, inter alia, provided for the creation of the post of registrar of cooperative societies and registrationof cooperative societies for various purposes and audit. Under the Montague-Chelmsford Reforms of1919, cooperation became a provincial subject and the provinces were authorised to make their owncooperative laws. Under the Government of India Act, 1935, cooperatives were treated as a provincial


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subject. The item "Cooperative Societies" is a State Subject under entry No.32 of the State List of theConstitution of India.

In order to cover Cooperative Societies with membership from more than one province, theGovernment of India enacted the Multi-Unit Cooperative Societies Act, 1942. This Act was an enabling

legislative instrument dealing with incorporation and winding up of cooperative societies having jurisdiction in more than one province. With the emergence of national federations of cooperativesocieties in various functional areas and to obviate the plethora of different laws governing the sametypes of societies, a need was felt for a comprehensive Central legislation to consolidate the lawsgoverning such cooperative societies. Therefore, the Multi-State Cooperative Societies Act, 1984 wasenacted by Parliament under Entry No. 44 of the Union List of the Constitution of India.

After India attained Independence in August, 1947, cooperatives assumed a great significance inpoverty removal and faster socio-economic growth . With the advent of the planning process,cooperatives became an integral part of the Five Year Pl ans. As a result, they emerged as a distinctsegment in our national economy. In the First Five Year Plan, it was specifically stated that the success ofthe Plan would be judged, among other things, by the extent it was implemented through cooperativeorganizations.

The All-India Rural Credit Survey Committee Report, 1954 recommended an integrated approach tocooperative credit and emphasized the need for viable credit cooperative societies by expanding theirarea of operation, encouraging rural savings and diversifying business. The Committee alsorecommended for Government participation in the share capital of the cooperatives.

In view of these recommendations, different States drew up various schemes for the cooperativemovement for organizing large-size societies and provision of State partnership and assistance. During

1960s, further efforts were made to consolidate the cooperative societies by their re-organisation.Consequently, the number of primary agricultural cooperative credit societies was reduced from aroundtwo lakh to 92,000.

Evolution

In 1958 the National Development Council (NDC) had recommended a national policy oncooperatives. Jawaharlal Nehru had a strong faith in the cooperative movement. While opening aninternational seminar on cooperative leadership in South-East Asia he had said " But my outlook atpresent is not the outlook of spreading the cooperative movement gradually, progressively, as it hasdone. My outlook is to convulse India with the Cooperative Movement or rather with cooperation tomake it, broadly speaking, the basic activity of India, in every village as well as elsewhere; and finally,indeed, to make the cooperative approach the common thinking of India....Therefore, the whole futureof India really depends on the success of this approach of ours to these vast numbers, hundreds ofmillions of people".


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The cooperative sector has been playing a distinct and significant role in the countrys process ofsocio-economic development. There has been a substantial growth of this sector in diverse areas ofthe economy during the past few decades . The number of all types of cooperatives increased from 1.81lakh in 1950-51 to 4.53 lakh in 1996-97. The total membership of cooperative societies increased from1.55 crore to 20.45 crore during the same period. The cooperatives have been operating in various

areas of the economy such as credit, production, processing, ,marketing, input distribution, housing,dairying and textiles . In some of the areas of their activities like dairying, urban banking and housing,sugar and handlooms, the cooperatives have achieved success to an extent but there are larger areaswhere they have not been so successful.

The failure of cooperatives in the country is mainly attributable to: dormant membership and lack ofactive participation of members in the management of cooperatives.

Mounting overdoes in cooperative credit institution, lack of mobilisation of internal resources andover-dependence on Government assistance,

lack of professional management.

bureaucratic control and interference in the management,

political interference and over-politisation have proved harmful to their growth.

Predominance of vested interests resulting in non-percolation of benefits to a common member,particularly to the class of persons for whom such cooperatives were basically formed, has also retardedthe development of cooperatives. These are the areas which need to be attended to by evolving suitablelegislative and policy support.

Get complete information on the Structure of Co-OperativeBanking In India

NUPUR SINGH

The Co-operative Credit Institutions in India can be classified as under:

From the chart, it can be seen that the organization of the Co-operative Credit Societies is pyramidal innature. It has a three-tier structure.

(i) Primary Credit Societies at the bottom.

(ii) Central Co-operative Bank at the middle,


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(iii) State Co-operative Bank at the top.

That is, the primary societies are functioning in the various towns and villages, the Central Banks at thedistrict headquarters and the State Co-operative Banks at the state capitals forming the apex of thesystem.

The Reserve Bank of India assist the co-operative structure by providing concessional finance throughNABARD in the form of General Lines of Credit for lending to agricultural activities. Thus, the wholesystem is integrated with the Banking structure of the country.

Let us discuss about these institutions one by one.

(i) The Primary Agricultural Credit Societies:

A primary society is an association of borrowers and non-borrowers residing in a particular locality andtaking interest in the business affairs of one another. As membership is practically open to allinhabitants of a locality, people of different status are brought together into the common organization.

The affairs of those organisation are managed by honorary secretaries and presidents assisted byboards of directors, all these officials being elected from amongst the shareholders on the principle 'ofone man, one vote'. Most of the societies are organised and working on the principle of unlimitedliability.

The society may be started with ten or more persons of a village. In March 2001, nearly 1, 00,000 PACswere operating in various states in India. They had a total membership of nearly 10, 00, 00,000 (TenCrore) as on that date.

Their deposit base is very poor at Rs. 13,481 crore as at end March 2001. Total outstanding loans of allPACs are totally dependent on CCBs for their financial needs. NABARD has also been extending funds todevelop the infrastructure of PACs.

The primary society derives its funds from entrance fees, share capital, reserve funds deposit or loansfrom non-members, from central and provincial co-operative banks and from the Government. Thedeposits of the society may be either fixed, savings or recurring.

Unfortunately, the deposits of primary societies are not sufficiently large. The society provides short-term credit to its members ordinarily on the personal security of the borrower with the personal suretyor sureties of other members. It may also lend on mortgages.

(ii) Central Co-operative Banks:

A Central Co-operative Bank is a federation of primary societies in a specified area. Where membershipof a Central Co-operative Bank is restricted to primary societies only, it is known as a 'banking union'.Nowadays, individuals are also admitted as members of almost all Central Co-operative Banks.

Central Co-operative Banks are generally situated at the headquarters of district and have on their


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boards of management, individuals of sufficient influence and business capacity in addition torepresentatives of primary societies. The CCBs form an important part in the short-term structure ofCo-operative Credit Institutions.

As at March 2001 there were 367 district central co-operative Banks with 12580 branches in various

states in India. The total deposits of CCBs as at end March 2001 amounted to Rs. 61,786 crore ascompared to Rs. 54,248 crore in March 2000.

The CCBs also borrow money from NABARD for their operations. The recovery performance of CCBs inMarch 2001,245 made profits while 112 CCBs made losses during 2000-2001.

A Central Co-operative Bank obtains its funds from share capital, reserve funds, deposits (current,fixed, savings, recurring) and loans from the State Co-operative Bank or other joint stock banks.

Sometimes primary societies deposit their surplus funds with the Central Co-operative Banks to whichthey are affiliated and this forms another source of funds for the Central Co-operative Banks.

Operation of the Bank

The primary business of Central Co-operative Banks consists of financing primary societies. In somecases, they attract the surplus funds of certain primary societies, to supply the same to others. Thus,Central Co-operative Banks Act as balancing centres to the primary societies.

Again, the deposits of urban areas are made available to the rural areas through the agency of thesebanks. Although normally Central Co-operative Banks do not transact many a banking business as such,they do it in Mumbai and Chennai.

The deposits with Central Banks have recently grown so great in volume that Central Banks are not ableto employ them within the co-operative movement.

They do not, as a rule, lend for commercial purposes and therefore are compelled to invest their fundsin Government Securities. However, with the growth of other types of co-operative movement thesefunds may be absorbed by the various types of co-operative societies.

(iii) State Co-operative Banks:

At the top of the co-operative banking, there are State Cooperative Banks, organized with the object ofattracting deposits from the rich urban classes. These Banks are also more suitably equipped to serve

as channel between the co-operative movement and the joint stock banks.There are at present 30 such banks. The constitution of these banks differs from one another, butgenerally speaking, their membership comprises representatives of Central Banks as well as individualshareholders. A logical development of these banks would have been the establishment of all-India Co-operative bank.

But there is no such institution, although the Indian State Co-operative Banks Association has been co-


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ordinating their activities and performing certain services to all these Banks. NABARD maintains contactwith the State Co-operative Banks.

In addition to offering them rediscount facilities, collect and disseminate useful information regardingco-operative movement. As at end March 2002, there were 30 SCBs with 831 branches in India.

The total deposits of all SCBs as at end March 2001 aggregated to Rs. 32626 crore as compared to Rs.29557 crore in March 2000.

Among the states, Maharashtra mobilized maximum deposits of Rs. 9136/- crore, followed by TamilNadu at Rs. 2745 crore. Tamil Nadu came third with Rs. 1635 crore of deposits in March 1997 of the 30SCBs in 2001,23 made profits while 6 made losses during 2000-01.

Capital and Operation of the Bank

The State Co-operative Banks attract deposits from the richer urban classes and grant financialaccommodation to Central Co-operative Banks and through them to primary societies. They form theonly link between the co-operative organizations on the one hand and the money market and jointstock banks on the other.

They are the balancing factors as between Central Co-operative Banks; for the transfer the surplusfunds available with some Central Banks to the needy ones.

The State Co-operative Banks derive their funds from share capital, reserve fund, deposit from thepublic, loans from the State Bank, joint stock banks and deposits of surplus funds from some of theCentral Banks affiliated to them.

Generally speaking, it may be stated that the organization of the State Co-operative Banks is veryefficient and, in spite of competition from joint stock banks, they do very good business.

They are prohibited from transacting all types of commercial banking business and so their funds arenot at present being fully employed. With the growth of Co-operative movement these funds may indue course be more effectively and efficiently employed within the movement.

Many a time's students get confused about the banking business and the principal reason forestablishment of different banking institutions at base level. Let us see the basic distinguishing featuresof these banking institutions in the Co-operative Sector in India.

Co-operative Banks Banks established under the co-operative system are called Co-operative Banks. These are State Co-operative Banks, Central Co-operative Banks and Primary Co-operative Banks. SCB is an apex level bankfor a state. CCBs are apex level banks for each district. Primary Cooperative Banks are rural or Semi-Urban Level Co-operative Banks.

These are financial institutions whose primary objects are to provide credit facilities, i.e., loans and


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advances to its member only. These societies are formed in large organizations or GovernmentDepartments or at certain regions. The members are those working in the particularorganization/region. They collect subscriptions, deposits, etc., from members and loans from co-operative banks and extend credit facilities to its members only.

Primary Agricultural Credit Society

These are similar to credit societies explained above, but these credit societies can extend loans to itsmembers only for the purpose of agriculture connected activities.

Credit societies are not permitted to undertake all banking business. In other words, they cannotprovide cheque book facility to members and they cannot deal with persons other than their members.

While the RBI has overall control on all financial institutions, operational guidelines and control over co-operative banks are exercised by NABARD. The cooperative banks need to have a minimum paid-upcapital of Rs. 1 lakh only.

Documents

5. ROLE OF REGISTRAR OF COOPERATIVE SOCIETIES.docx