The Office of the Central Registrar of Cooperative Societies (CRCS) has allowed Karnataka’s Belgaum-based Shri Beereshwar Cooperative Credit Society to compute its aggregate exposure limit, deposits from voting members and loans, on a financial-year basis, providing a significant operational clarification under Clause 7.1 of the CRCS order dated January 22, 2024.
In an official communication, the CRCS clarified that, in accordance with Section 67(1) of the Multi-State Cooperative Societies (Amendment) Act, 2023, the total amount of deposits and loans received during any financial year shall not exceed the prescribed multiple of the society’s financial base.
The clarification further states that the exposure ceiling shall be calculated as a multiple, currently ten times, of the subscribed share capital and accumulated reserves, after deducting accumulated losses, as determined by the Central Government.
The development is significant as Clause 7.1 of the earlier CRCS order required that aggregate exposure should not exceed the prescribed limit “at all times”, implying a continuous cap on deposits and borrowings. By expressly introducing the phrase “during any financial year” in the Beereshwar case, the CRCS has allowed the society to align exposure computation with an annual financial-year framework, rather than a running, round-the-year ceiling.
Officials, however, clarified that this interpretation has been issued in response to a specific representation from Shri Beereshwar Cooperative Credit Society and is currently applicable only to the society concerned.
At the same time, it is gathered from sources that the CRCS is examining the issue in a comprehensive manner and is likely to issue a common circular to clarify the applicable exposure computation period for all Multi-State Cooperative Societies (MSCS), with the aim of ensuring uniform interpretation and regulatory certainty.
The clarification has been issued with the approval of the Central Registrar of Cooperative Societies.
Observers in the credit cooperative sector believe that a general circular, if issued, could bring much-needed clarity on exposure planning, compliance, and liquidity management, firmly establishing that exposure limits are to be assessed on a financial-year basis rather than as a continuous “at all times” measure under the amended legal framework.