The Hindu : Tamil Nadu News : Law on the anvil to amend Cooperative Societies Act

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Saturday, Jun 28, 2008
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Tamil Nadu

Tamil Nadu

Law on the anvil to amend Cooperative Societies Act

T. Ramakrishnan

Government has decided to implement reform package for societies

CHENNAI: The State government is working on a legislation to amend the Cooperative Societies Act in the wake of its decision to implement the reform package for cooperative societies.

[In January, the State Government signed a memorandum of understanding with the Union Government and the National Bank for Agriculture and Rural Development (NABARD) for implementing the recommendations of the Vaidyanathan Task Force on the short-term rural cooperative credit structure (STCCS). Instituted by the Centre in August 2004, the task force submitted its report on the STCCS in February 2005. It presented its report for the revival of the long-term CCS in August 2006.] The legislation will cover a number of issues such as granting operational autonomy to cooperative societies with regard to appointment of staff and pay structure, limiting the State government’s powers to supersede the elected bodies and removing State intervention in financial and internal administrative matters.

It envisages ensuring full voting membership rights on all users of financial services including depositors in cooperatives other than cooperative banks.

It will also provide a cap of 25 per cent on the State government equity in cooperatives and limiting participation in the boards of cooperative banks to one nominee.

The legislation will be issued in the form of an ordinance, which is likely to be promulgated in a month, according to an official.

Appointment of staff

Explaining further, the official says in the matters of appointment of staff, norms of the Reserve Bank of India (RBI) and the NABARD will have to be followed. The Managing Directors of the cooperative banks will be appointed by the respective banks themselves in consultation with the NABARD and the RBI.

On financial matters concerning borrowing and investment, the cooperative institutions will have to follow instructions of the two Central institutions. Statutory auditors, appointed by the RBI and NABARD, will carry out a random audit of the primary agricultural cooperative societies (PACS) while they will cover all the district central cooperative banks (DCCBs) and the Apex Cooperative Bank.

The reform package means that the State will get Rs.925 crore, of which the State government’s share will be Rs.178 crore with the rest from the Centre. The assistance is available, among others, for wiping out accumulated losses and increasing the capital to a specified minimum level.

At present, the preparatory work is under way for a special audit of accounts of all the PACS, DCCBs and the Apex bank.

Training programme

A training programme is being given to special auditors.

The special audit has been proposed to assess the exact quantum of accumulated losses, which will be wiped out under the reform package.

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