Multi-State Cooperative Societies (Amendment) Bill, 2022

Context: Recently, the Union Cabinet approved the Multi-State Cooperative Societies (Amendment) Bill, 2022 after the announcement by the Union Cooperation Minister.

Provisions of the Amendment Bill 2022:

• Incorporation of provisions of the 97th Constitutional Amendment Act 2011:
  • Regarding constitutional status and protection to cooperatives and guarantees democratic and independent functioning of the cooperative societies.
• Democratic governance: The bill has provisions for setting up of cooperative election authority, cooperative information officer, cooperative ombudsman etc. to make governance of multi-state cooperative societies more democratic, transparent and accountable.
• Reform electoral processes: The cooperative election authority will ensure fair, free and timely elections and reduce electoral complaints and malpractices.
  • The Bill also provides for debarring offenders for three years, hence will bring in more electoral discipline.
• Grievance redressal: The cooperative ombudsman will set up a mechanism for grievance redressal of the cooperative societies members in a structured fashion.
• Strengthen monitoring mechanisms: The bill empowers the Central government to suspend the Board of a MSCS for fraud or embezzlement of funds or failure to conduct elections within a stipulated time.
  • It will also debar relatives of a sitting director to be recruited as an employee in the same cooperative.
• Improved composition of the Board: For promoting the professional management of the cooperatives, the bill has provisions-
  • To bring in co-opted directors with experience in the field of banking, management, cooperative management and finance.
  • The option of including the members having specialization in any field relating to the objects and activities undertaken by such multi-state cooperative society.
• Enhance transparency and accountability: The Bill proposes to appoint a Cooperative Information Officer who will enhance the transparency in functioning by providing the members timely access to information.
• To promote equity and facilitate inclusiveness, the bill includes provisions relating to representation of women and Scheduled Caste/Scheduled Tribe members on the board of multi-state cooperative societies.
• Improve ease of doing business: The amendment Bill proposes-
  • To reduce the period of registration, with a provision for the applicants to seek additional time of two months for rectification of mistakes.
  • For electronic submission and issuance of documents, thus providing for a comprehensive digital ecosystem.
• Simpler registration: Presently, India has nearly 800,000 cooperative societies of which around 1,600 are MSCS thus serve the interest of members in more than one state. For example, IFFCO, Kribhco and NAFED.
• Increase financial discipline: The bill provides for the Rehabilitation Fund for the revival of sick cooperatives and enables raising of funds in multi-state cooperative societies.
• Regulation: For cooperative banks, the banking functions will be governed by the Banking Regulation Act. However, all other operational issues will be regulated by the MSCS Act and its new amendments.

About Cooperative Societies in India:

• A co-operative society is a voluntary association of individuals having common needs who join hands for the achievement of common economic interest.
• Its aim is to serve the interest of the poorer sections of society through the principle of self-help and mutual help.

97th Constitutional Amendment Act 2011:

• It established the right to form cooperative societies as a fundamental right (Article 19).
• It included a new Directive Principle of State Policy on the Promotion of Cooperative Societies (Article 43-B).
• It added a new Part IX-B to the Constitution titled “The Co-operative Societies” (Articles 243-ZH to 243-ZT).
• It authorizes the Parliament to establish relevant laws in the case of multi-state cooperative societies (MSCS) and state legislatures in the case of other cooperative societies.
• Of the 1600 odd MSCS, the majority are in Maharashtra (570), followed by UP (150) and New Delhi (133).
• Credit cooperatives constitute the bulk of the MSCS (610), followed by agriculture-oriented MSCS (244).
• There are around 100 multi-state cooperative diaries and 70 multi-state cooperative banks.

About new Ministry of Cooperation:

• The Union Ministry of Cooperation was formed in 2021, its mandate was looked after by the Ministry of Agriculture before.

Objectives of creation of the new ministry:

• To realize the vision of “Sahakar se Samriddhi” (prosperity through cooperation).
• To streamline processes for ‘’Ease of doing business’’ for co-operatives and enable development of Multi-State Co-operatives (MSCS).
• To provide a separate administrative, legal and policy framework for strengthening the cooperative movements in the country.
• To deepen the cooperative as a true people-based movement reaching up to the grassroot level.

Way Forward:

• The Bill is expected to be introduced during the winter session of Parliament. The bill if passed will enhance transparency, accountability and improve ease of doing business for the cooperatives.
• The Union Cooperation Minister had also announced bringing in a new national cooperative policy for holistic management and success of cooperatives movement in India.

Source: The Hindu

Previous Year Question

Q.1) With reference to Urban Cooperative Banks in India, consider the following statements:

1. They are supervised and regulated by local boards set up by the State Governments.
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1996

Which of the statements given above is/are correct?    (2021)

1. 1 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3

Q.2) With reference to Urban Cooperative Banks in India, consider the following statements:

1. They are supervised and regulated by local boards set up by the State Governments.
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1996

Which of the statements given above is/are correct?  (2020)

1. 1 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3