In a significant move to enhance financial discipline and strengthen governance in the cooperative sector, the Office of the Central Registrar of Cooperative Societies (CRCS) on Monday issued stricter norms for opening new branches or places of business by Multi-State Cooperative Societies (MSCSs).
Under the revised guidelines, MSCSs must now obtain prior approval from the CRCS before initiating any branch expansion.
The directive modifies Para 8(i) of the CRCS order dated 22 January 2024 and follows earlier communications issued on 1 December 2016, 16 December 2019, and 4 April 2024. These changes are aligned with Section 7 of the Multi-State Cooperative Societies (Amendment) Act, 2023, and the Liquidity, Exposure & Prudential Norms notified on 22 January 2024. Additionally, a compliance roadmap—referred to as a “glide path”—was released on 22 January 2025.
As per the updated procedure, societies must apply online via the CRCS portal and submit a comprehensive set of 18 documents. These include a justification for opening new branches, a declaration confirming the absence of complaints related to non-payment of deposits or other irregularities, and a resolution passed in the AGM or a special general meeting authorizing the expansion.
Applicants must also furnish three-year data on membership (regular and nominal), branch-wise deposits, business performance of existing units, investment patterns, financial results, and board election records. Additional documentation regarding Annual General Meetings and statutory returns filed under Section 120 of the MSCS Act, 2002, is also required.
A key provision mandates submission of a certificate from the Registrar of Cooperative Societies (RCS) of the state or union territory where the head office is located. This certificate must confirm that the society is not accepting deposits from non-voting members.
Thrift and credit societies are subject to additional scrutiny. They must provide five auditor-certified documents confirming compliance with Capital to Risk-Weighted Assets Ratio (CRAR) norms, Gross and Net Non-Performing Assets (Gross NPA below 7% and Net NPA below 3%), consistent net profits over the last three years, maintenance of liquidity buffers, and strong internal control systems, including proper KYC procedures and a functional grievance redressal mechanism.
To ensure responsible expansion, the CRCS has limited approvals to not more than 10% of the society’s existing branches in any financial year, subject to a maximum of 10 new branches.
These revised norms aim to promote transparency and financial stability across the multi-State cooperative sector. With growing public participation in cooperative finance, the measures are seen as a necessary safeguard to protect depositors and curb indiscriminate expansion by societies lacking sufficient financial or governance capacity.
