M'rashtra amends Act to democratise co-ops

The Maharashtra cabinet today cleared the proposal to amend the Maharashtra Co-operatives Society Act which will democratise the co-operative banking structure.

It is also aimed to make them more transparent and free it of political and administrative interventions. This will make co-operative banks from the state eligible to get Rs 1,800 crore of grant from the National Bank for Agriculture and Rural Development (NABARD).

The amendment bill will be tabled in the winter session of the state assembly. Accepting the Vaidyanathan Committee's report constituted by the Reserve Bank of India (RBI) to suggest improvements in functioning of the co-operative banks, the state government signed a tripartite Memorandum of Understanding (MoU) with the RBI and the Centre to carry out reforms in the co-operative banking sector in the state. The amendment bill to the state co-operative society act is part of the state government's commitment to carry out these reforms.

The important reforms include giving voting rights even to depositors of primary agriculture credit co-operative societies affiliated to the district co-operative banks (DCB).

The banks will have the autonomy to take administrative and financial decisions. The state government's control over the bank's decisions on these matter will be removed.

The state government's capital in these co-operative institutions which include credit co-operative societies, DCCs and state co-operative banks will be restricted to 25 per cent. The district and state co-operative banks will take their investment decisions in consultation with the RBI and the state government will have no say in these matters.

The representatives of the defaulting primary credit co-operative societies or DCBs can't become directors of DCBs or state co-operative bank respectively.

However, the state government's decision to reform the act was taken after the state government received much flak from the Centre, and the RBI for the delay in bringing necessary amendments to co-operative act of the state.

The state cabinet may have given the go ahead to carry out these reforms but that is no guarantee that amendments will be approved by the legislature, and look at what has happened to repeal the Urban Land Ceiling Act (ULCA) Bill, that is waiting for ratification of the legislature for the last three sessions, sources in co-operative department pointed out.