**Executive Summary**
This document summarizes the status of ongoing investigations in the cooperative sector in Kerala as of December 16, 2025. It outlines the responsibilities of multi-State cooperative societies, details current investigations, and describes recent amendments to strengthen regulation, transparency, and accountability within these societies. The document mentions 4 multi-State cooperative societies in Kerala are under investigation.
**Key Points / Main Content**
* **Multi-State Cooperative Societies (MSCS) Operations:**
* MSCS are autonomous and accountable to their members.
* They must adhere to the MSCS Act, 2002, its rules, and approved bye-laws.
* In case of irregularities, the Registrar of Cooperative Societies of the State and other agencies may conduct inspections under sections 108 and 78 of the MSCS Act, 2002.
* **Investigations in Kerala:**
* 4 multi-State cooperative societies in Kerala are under investigation.
* Information regarding investigations of cooperative institutions registered under the State Cooperative Societies Act is not maintained by the Central Government.
* **Amendments to MSCS Act & Rules:**
* The MSCS Act & Rules were comprehensively amended and notified on 03.08.2023 and 04.08.2023 to strengthen regulation, transparency, and accountability.
* Amendments include incorporating the provisions of the Ninety-seventh Constitutional Amendment.
* **Provisions Introduced by the Amendments:**
* Cooperative Election Authority ensures timely, regular, and transparent elections.
* Appointment of Co-operative Ombudsman to address member grievances.
* Appointment of Information Officer to improve transparency for members.
* Concurrent Audit for Multi-State Cooperative Societies with turnover/deposits of more than 500 crore rupees.
* Audit reports of National co-operative societies to be laid in Parliament.
* Accounting and auditing standards to be determined by the Central Government.
* Annual reports to include non-unanimous Board decisions.
* Central Government to determine prudential norms.
* Directors cannot participate in discussions on matters where they or relatives are interested.
* Additional grounds for disqualification for directors.
* Provisions for Investment of funds have been redefined.
* Boards to constitute Committee for Audit and Ethics.
* Criteria for appointment of Chief Executive Officer (CEO) stipulated.
* Quorum prescribed for board meetings.
* Central Registrar can conduct inquiry into fraudulent or unlawful business.
* Provision for winding up a society if registration obtained via misrepresentation.
* Minimum expulsion period for members acting against collective interests increased from 1 to 3 years.
**Impact Analysis**
**Multi-State Cooperative Societies**
* **Impact**
The amendments impose stricter operational guidelines, transparency requirements, and increased oversight. They must now adhere to more stringent regulations regarding financial matters, elections, governance, and member relations.
* **Action Required**
Review and implement the amended MSCS Act & Rules, including updating internal processes, bye-laws, and governance structures. Implement the new reporting and audit requirements and ensure compliance with the new operational guidelines.
**Members of Multi-State Cooperative Societies**
* **Impact**
Members benefit from increased transparency, avenues for addressing grievances, and protection against mismanagement or fraud.
* **Action Required**
Stay informed about the changes in the MSCS Act & Rules, understand their rights and responsibilities, and participate in the governance and decision-making processes of their cooperative.
**Central Registrar of Cooperative Societies (CRCS)**
* **Impact**
The CRCS has expanded authority and responsibilities in overseeing and regulating MSCS, including conducting inquiries and approving auditors.
* **Action Required**
Implement the new regulations, establish mechanisms for monitoring compliance, and oversee the Concurrent Audit process. Investigate reports of fraudulent or unlawful activities within MSCS.
**Government of India**
* **Impact**
The Government is responsible for setting accounting and auditing standards and determining prudential norms.
* **Action Required**
The Government of India must set accounting and auditing standards and determining prudential norms for multi-State cooperative societies.
Key Entities Referenced
Multi-State Cooperative Societies (MSCS) Act, 2002: Governs cooperative societies operating in multiple states in India.
Kerala: The state where the cooperative sector investigations are focused.
Ministry of Cooperation: Union government ministry responsible for the cooperative sector in India.
Central Registrar of Cooperative Societies (CRCS): The authority that registers and regulates multi-state cooperative societies.
Ninety-seventh Constitutional Amendment: Constitutional amendment related to cooperative societies
GOVERNMENT OF INDIA
MINISTRY OF COOPERATION
LOK SABHA
UNSTARRED QUESTION No. 2675
TO BE ANSWERED ON 16th DECEMBER, 2025
Status of Ongoing Investigations in the Cooperative Sector in Kerala
2675 Shri Kodikunnil Suresh:
Will the Minister of COOPERATION (सहकारिता मंत्री) be pleased to state:
(a) the present status of ongoing investigations in the cooperative sector of Kerala, particularly
in cooperative banks and credit societies;
(b) the names of institutions under investigation, amounts involved, nature of irregularities and
the agencies conducting the inquiries;
(c) the number of officials identified, suspended or charge-sheeted and the current status of
legal or disciplinary actions against them;
(d) whether central agencies such as the Enforcement Directorate (ED), Central Bureau of
Investigation (CBI), Income Tax Department or Registrar of Cooperative Societies are involved
in these investigations and if so, the details thereof;
(e) the details of financial losses suffered by depositors or account holders and the measures
taken for their refund or recovery; and
(f) the steps taken by the Government to strengthen regulation, transparency and accountability
in cooperative institutions in Kerala to prevent such irregularities?
ANSWER
THE MINISTER OF COOPERATION
सहकारिता मंत्री (SHRI AMIT SHAH)
(a) to (e): Cooperative societies registered under the provisions of the Multi-State Cooperative
Societies (MSCS) Act, 2002 function as autonomous cooperative organisations and
accountable to their members. The multi-State cooperative societies are required to function as
per the provisions of Multi-State Cooperative Societies Act, 2002 and rules framed thereunder
read with approved bye-laws of the Society which includes the roles and powers of the
members, Board, General Body of the society and Central Registrar of Cooperative Societies
(CRCS).
In case of irregularities in the functioning of multi-State cooperative societies, the
Registrar of Cooperative Societies of the State concerned and other agencies are requested to
conduct inspection/inquiry of such societies under sections 108 and 78 of the MSCS Act, 2002.
In Kerala State, 4 multi-State cooperative societies are under investigation. The information
regarding investigation in the cooperative institutions, which are registered under the State
Cooperative societies Act is not maintained by the Central Government.
(f) To strengthen regulation, transparency and accountability in multi-State cooperative
societies, the MSCS Act & Rules were comprehensively amended and notified on 03.08.2023
and 04.08.2023 respectively by supplementing existing legislation and incorporating the
provisions of Ninety-seventh Constitutional Amendment.Many provisions have been introduced via the above amendment to bring transparency in the
functioning of multi state cooperative societies and prevent financial irregularities therein,
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 made.
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. 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
Central Registrar. Concurrent audit will ensure early detection of fraud or irregularities, if
any, and accordingly prompt course corrections can be made.
v. Audit reports of National co-operative societies to be laid in Parliament to improve
transparency.
vi. Accounting and auditing standards for multi-State cooperative societies to be determined
by Central Government to ensure uniformity in accounting and auditing.
vii. To improve governance and transparency, annual report of multi-State cooperative
societies to include Board decisions which are not unanimous.
viii. Central Government to determine prudential norms (liquidity, exposure, etc.) for multi-
State co-operative societies in the business of thrift and credit.
ix. To curb nepotism and favouritism 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.
x. Additional grounds for disqualification for directors have been made to improve
governance.
xi. 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.
xii. To have more financial discipline and transparency, the board of multi-State co-operative
societies to constitute Committee for Audit and Ethics alongwith other committees.
xiii. For strengthening governance, criteria for appointment of Chief Executive Officer (CEO)
stipulated.
xiv. To enhance democratic decision making in the multi-State cooperative societies, quorum
has been prescribed for board meetings.
xv. Central Registrar to conduct inquiry if he gets information that business is being conducted
in a fraudulent manner or for unlawful purposes.
xvi. If registration obtained by misrepresentation, fraud, etc., provision for winding up of a
multi-State cooperative society after giving opportunity of being heard.
xvii. 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.
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