As many as 56 Multi-State Cooperative Societies (MSCSs) have been brought under liquidation during the last five years following financial irregularities, including embezzlement of funds and default in repayment of deposits, Union Minister for Cooperation Amit Shah informed the Lok Sabha on Tuesday.
In a written reply, Shah said that cooperatives registered under the Multi-State Cooperative Societies (MSCS) Act, 2002 function as autonomous bodies and are primarily accountable to their members. Their operations are governed by the provisions of the Act, associated Rules and the approved bye-laws of each society.
Explaining the regulatory framework, the Minister said that under Section 49 of the MSCS Act, key business decisions such as admission of members and acceptance or refund of deposits fall within the powers of the Board of the Society, while day-to-day management is handled by the Chief Executive, as provided under Section 52 of the Act.
However, Shah clarified that in cases where serious irregularities are detected, including financial mismanagement, embezzlement or failure to repay depositors, the Government initiates winding-up proceedings under Section 86 of the MSCS Act. A liquidator is appointed under Section 89 to liquidate the assets of the society and facilitate payment to depositors as per legal provisions.
Providing details, the Minister said that 56 MSCSs across multiple States were ordered to be liquidated between 2021 and 2025. These societies were located in States including Rajasthan, Delhi, Uttar Pradesh, Maharashtra, West Bengal, Bihar, Jharkhand, Karnataka, Punjab, Andhra Pradesh, Odisha and Dadra & Nagar Haveli.
A significant number of liquidation cases were reported from Rajasthan, Delhi, Maharashtra and West Bengal, largely involving credit and multipurpose cooperative societies. The list includes societies engaged in credit, thrift, housing and multipurpose activities.
The Minister emphasised that the liquidation process is undertaken strictly in accordance with the MSCS Act, 2002 and Rules framed thereunder, with the objective of protecting the interests of depositors and maintaining discipline in the cooperative sector.
Shah reiterated that while cooperatives enjoy functional autonomy, the Government remains committed to regulatory oversight and corrective action wherever violations of law or member interests are found.