Union Cooperation Minister Amit Shah on Wednesday outlined a comprehensive set of reforms aimed at strengthening transparency, accountability, and governance in multi-state cooperative societies, while replying in the Rajya Sabha.
In his written reply, Shah stated that the Multi-State Cooperative Societies (Amendment) Act & Rules, 2023, notified in August 2023, introduce key structural measures to curb financial irregularities and improve the functioning of cooperative institutions, including cooperative banks.
He highlighted that provisions such as the establishment of a Cooperative Election Authority will ensure free and timely elections, while a Cooperative Ombudsman will address grievances of members. The appointment of Information Officers and the requirement to place audit reports of apex societies in Parliament are aimed at enhancing transparency.
The Minister further emphasized governance reforms, including stricter norms for directors, conflict-of-interest restrictions, mandatory Audit and Ethics Committees, and defined eligibility criteria for Chief Executive Officers. The Central Government has also been empowered to prescribe accounting standards and prudential norms, ensuring uniformity and financial discipline across cooperative institutions.
To strengthen early detection of financial irregularities, Shah informed that concurrent audits have been made mandatory for multi-state cooperative societies with deposits or turnover exceeding Rs 500 crore. Separate panels of auditors have also been notified to ensure rigorous and specialized auditing practices.
Highlighting statutory audit provisions, Shah noted that under Section 70 of the Multi-State Cooperative Societies Act, 2002, every society is required to appoint an auditor at each Annual General Meeting from a panel approved by the Central Registrar.
The appointed auditor must submit the audit report within six months from the closure of the financial year. Further, as per Section 72 of the Act, only a qualified Chartered Accountant is eligible to be appointed as an auditor of a multi-state cooperative society.
He also stated that the Central Registrar has been empowered to initiate inquiries into cases of suspected fraud or unlawful activities and take necessary action, including the winding up of societies where registration has been obtained through misrepresentation.
The reforms, aligned with the spirit of the 97th Constitutional Amendment, aim to make the cooperative sector more transparent, accountable, and democratically governed, ensuring greater protection of members’ interests.