**Executive Summary**
This report outlines the financial support frameworks and regulatory reforms for Indian cooperative institutions, specifically highlighting the Multi-State Cooperative Societies (Amendment) Act & Rules, 2023. These amendments aim to strengthen governance, enhance transparency, and reform electoral processes through the establishment of new authorities and stricter audit standards. Key measures include the introduction of a Cooperative Ombudsman, mandatory concurrent audits for large societies, and the creation of a Cooperative Election Authority.
**Key Points / Main Content**
**Financial Assistance and Scope**
* Cooperatives such as Milk Unions and Cooperative banks fall under State jurisdiction but receive financial support from both State and Central Government schemes (e.g., NPDD, PMMSY, and Atmanirbharta Abhiyan).
* The Right to Information (RTI) Act, 2005 applies only to those cooperative institutions that are "substantially financed" by the government.
**Governance and Transparency Reforms**
* **Cooperative Election Authority:** Established to ensure the timely, regular, and transparent conduct of elections.
* **Cooperative Ombudsman:** Appointed by the Central Government to provide a formal mechanism for addressing member grievances.
* **Information Officers:** Multi-State societies must appoint an officer to provide information relating to affairs and management to members.
* **Conflict of Interest:** To curb nepotism, Directors are prohibited from voting or participating in discussions on matters where they or their relatives are interested parties.
* **Board Accountability:** Annual reports must now include Board decisions that were not unanimous to improve transparency.
**Audit and Financial Discipline**
* **Standardization:** The Central Government will determine uniform accounting and auditing standards, as well as prudential norms (liquidity/exposure) for thrift and credit societies.
* **Concurrent Audit:** Mandatory for societies with a turnover or deposits exceeding 500 crore rupees, conducted by a panel approved by the Central Registrar.
* **Audit Submissions:** Audit reports must be submitted within six months of the financial year-end; Apex society reports must be laid before Parliament.
* **Auditor Qualifications:** Only Chartered Accountants from a panel approved by the Central Registrar can be appointed as auditors.
* **Audit and Ethics Committee:** Boards are required to constitute a dedicated Committee for Audit and Ethics.
**Regulatory Oversight and Enforcement**
* **Inquiry and Winding Up:** The Central Registrar can conduct inquiries into fraudulent activities and has the power to wind up societies if registration was obtained via misrepresentation.
* **Membership Expulsion:** The minimum period for the expulsion of a member has been increased from one year to three years.
* **Investment Safety:** Provisions for the investment of funds have been redefined to ensure safer investments by removing references to colonial-era securities.
**Impact Analysis**
**Multi-State Cooperative Societies (MSCS)**
**Impact**
Subject to increased regulatory oversight, stricter financial discipline, and mandatory transparency regarding board decisions and management.
**Action Required**
Must appoint Information Officers, establish Audit and Ethics committees, and ensure adherence to new Central Government accounting standards.
**Directors and Management**
**Impact**
Face stricter disqualification grounds and rigid conflict-of-interest rules to prevent favoritism.
**Action Required**
Must recuse themselves from deliberations involving personal interests and ensure board meetings meet newly prescribed quorum requirements.
**Large-Scale Cooperative Societies (Turnover/Deposits > 500 Crore)**
**Impact**
Subject to continuous financial monitoring through newly introduced concurrent audits.
**Action Required**
Must appoint auditors from the Central Registrar’s approved panel to conduct concurrent audits for early fraud detection.
**Society Members**
**Impact**
Gained enhanced democratic rights, better access to institutional information, and a specialized grievance redressal platform.
**Action Required**
Can approach the Cooperative Ombudsman for grievances and the Cooperative Information Officer for management data.
Key Entities Referenced
Multi-State Cooperative Societies (MSCS) (Amendment) Act & Rules, 2023: Legislation notified to strengthen governance, enhance transparency, and reform the electoral process in multi-state cooperative societies.
Multi-State Cooperative Societies Act, 2002: The primary legal framework governing the registration, auditing, and management of cooperative societies operating across multiple states.
Ministry of Cooperation: The central government body responsible for overseeing the policy, grants, and regulatory reforms for cooperative institutions.
Right to Information (RTI) Act, 2005: The transparency law applied to cooperative institutions that are substantially financed by the government.
Ninety-seventh Constitutional Amendment: A constitutional mandate incorporated into cooperative legislation to ensure democratic functioning and transparency.
Ministry of Cooperation
Grants To Cooperative Institutions
Posted On: 24 MAR 2026 5:27PM by PIB Delhi
Milk Unions, Cooperative banks, APMCs and State federations etc come under the purview of State
Governments. The State Government extends financial assistance, including grants and other forms of
support, to these cooperatives in accordance with their respective rules and regulations through various
schemes of State. Additionally, Government of India, give benefits to cooperatives through various central
sector and centrally sponsored schemes such as National Programme for Dairy Development (NPDD),
Atmanirbharta Abhiyan, Sustainable Alternative Towards Affordable Transportation (Satat) Mission,
Pradhan Mantri Matsya Sampada Yojana (PMMSY) etc.
The applicability of the Right to Information Act, 2005 to cooperative institutions is governed by Section
2(h) of the Act, under which only those institutions which are substantially financed by the appropriate
Government fall within its purview.
The Multi-State Cooperative Societies (MSCS) (Amendment) Act & Rules, 2023 have been notified on
03.08.2023 and 04.08.2023, respectively to strengthen governance, enhance transparency, increase
accountability and reform electoral process, etc. in the Multi State Cooperative Societies by
supplementing existing legislation and
incorporating the provisions of Ninety-seventh Constitutional Amendment. Many provisions have been
introduced through the above amendment to enhance transparency in the functioning of cooperative
societies, inter-alia: -
i. To ensure timely, regular and transparent conduct of elections in the multi-State cooperative
societies, provision of Cooperative Election Authority has been included.
ii. Appointment of Co-operative Ombudsman by Central Government to provide a mechanism to
address grievances of members.
iii. To improve transparency, appointment of Information Officer by multi-State cooperative
societies to provide information to members.
iv. Audit reports of Apex multi-State co-operative societies to be laid in Parliament to improve
transparency.
v. Accounting and auditing standards for multi-State cooperative societies to be determined by
Central Government to ensure uniformity in accounting and auditing.
vi. To improve governance and transparency, annual report of multi-State cooperative societies to
include Board decisions which are not unanimous.
vii. Central Government to determine prudential norms (liquidity, exposure, etc.) for multi- State
co-operative societies in the business of thrift and credit.
viii. To curb nepotism and favoritism in multi-State co-operative societies, the Director of a multi-
State cooperative society shall not be present in the discussion and vote on matters where he
or his relatives are an interested party.
ix. Additional grounds for disqualification for directors have been made to improve governance.x. Provisions for Investment of funds by the multi-State cooperative societies have been
redefined to ensure safer investments and remove references to colonial era securities.
xi. To have more financial discipline and transparency, the board of multi-State co-operative
societies to constitute Committee for Audit and Ethics amongst other committees.
xii. For strengthening governance, criteria for appointment of Chief Executive Officer (CEO)
stipulated.
xiii. To enhance democratic decision making in the multi-State cooperative societies, quorum has
been prescribed for board meetings.
xiv. Central Registrar to conduct inquiry if he gets information that business is being conducted in
a fraudulent manner or for unlawful purposes.
xv. If registration obtained by misrepresentation, fraud, etc., provision for winding up of a multi-
State cooperative society after giving opportunity of being heard.
xvi. To discourage members from acting against collective interests of the multi-State co-
operative societies, the minimum period of expulsion of an expelled member of a multi- State
co-operative society has been increased from 1 year to 3 years.
xvii. To prevent a few members only benefitting from resources of the society, Institutions with
majority equity shares held by the members of multi-State co-operative societies or their
relatives, would not be considered as subsidiary institution.
xviii. A provision for Concurrent Audit has been introduced for Multi-State Cooperative Societies
with turnover/deposits of more than 500 crore rupees from a panel of auditors approved by
the Central Registrar. Concurrent audit will ensure early detection of fraud or irregularities, if
any, so that prompt course corrections can be made.
As per the provisions of Section 70 of the Multi-State Cooperative Societies Act,
2002, every multi-State co-operative society is required to appoint an auditor or auditors at each Annual
General Meeting. Such auditors or auditing firms are to be selected from a panel approved by the Central
Registrar. The auditor so appointed is required to submit the audit report to the multi-State co-operative
society within six months from the closure of the financial year to which the accounts relate.
Further, as per Section 72 of the Multi-State Cooperative Societies Act, 2002, no person
shall be qualified for appointment as an auditor of a multi-State co-operative society unless he is a
Chartered Accountant within the meaning of the Chartered Accountants Act, 1949.
The existing provisions of the RTI Act already cover such institutions wherever they meet the criteria of
substantially financed by Government. Further, a provision under amended section 106 of Multi-State
Cooperative Societies Act, 2002 (as amended in 2023) has been made to appoint Cooperative Information
Officer by all multi-State cooperative societies to provide information relating to affairs and management
of the society to the members of the society.
This information was given by Union Minister for Home and Cooperation Shri Amit Shah in a written
reply in Lok Sabha.
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AK/AP
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