Co-operation सहकार

Quick summary

A co-operative society is run with a service motive, and the person matters more than capital. Its organisation has three levels: members, the managing committee (board of directors) and the office bearers – chairman, vice-chairman, secretary and treasurer. This chapter explains who can be a member and the rights, duties and powers of each level.

Key points

• Promoters who sign the registration application become the first members. Others apply later with entrance fee and share money.
• The society must decide on a membership application within three months and inform the applicant within 15 days of the decision.
• Who can be a member: an adult resident of the area, students (in student societies), firms, companies, public trusts, other co-operatives, local bodies, and the State or Central Government.
• Types of members: active, inactive, associate and nominal. An active member attends at least one annual general meeting in five years and uses the society's services.
• Rights: share certificate, attending and voting in meetings, contesting elections, applying to the Registrar, getting dividend and services, nomination.
• Duties: follow bye-laws, pay dues, use loans properly and repay them, attend meetings, protect the society's interest.
• Membership ends on death, resignation, transfer of shares, migration, expulsion, insolvency, dissolution or long inactivity.
• Managing committee: elected by members; an odd number, maximum 21, including two women members. It manages day-to-day affairs and acts as trustee of members.
• Chairman: elected by the committee; presides over meetings and has a casting vote in case of a tie.
• Secretary: the chief executive, in charge of office work, records and correspondence. Treasurer: in charge of cash, funds and accounts.

Important terms

• Member (सभासद) – owner of the co-operative society.
• Nominal member – member for a limited purpose, without full voting rights.
• Managing committee (व्यवस्थापन समिती) – elected body that runs the society.
• Casting vote – extra vote of the chairman to break a tie.

Formats and formulas

5 important questions

Q1. What is the maximum size of the managing committee?

21 members, and it must include two women members.

Q2. Who has the casting vote?

The chairman, used when votes are equal.

Q3. State the types of members of a co-operative society.

Active, inactive, associate and nominal members.

Q4. Explain the rights of a member.

Share certificate; attending, discussing and voting in meetings; contesting elections; applying to the Registrar; dividend, goods and services; nomination.

Q5. Explain the functions of the managing committee.

Implementing policies, approving membership, appointing staff, raising share capital and funds, solving grievances of members and staff, holding elections and general meetings.

Exam tip

Draw the organisational chart (members → committee → office bearers) at the start of long answers.

Quick summary

The secretary is the chief executive of a co-operative society. Accounts and correspondence are his most important duties. This chapter explains what correspondence is, why it matters, the layout of a business letter, and the letters a secretary writes to members, the managing committee and the Registrar.

Key points

• Communication is passing information or ideas from one person to another; correspondence is doing it in writing.
• Even with phone, fax and e-mail, letters still matter: they build goodwill and good relations.
• Importance: saves time, money and labour; acts as legal evidence in a court; builds relations with the business world; helps growth of business.
• Types: personal (private), official and commercial correspondence.
• Essentials of a good letter: brief, clear, short sentences, simple words, polite language, complete information.
• Letters to members: acceptance or rejection of membership, transfer of shares, loan sanction, reminder to loan defaulter, notice and agenda of the first, annual and special general meetings, dividend letter.
• Letters to the managing committee: notice and agenda of committee meetings and other information for directors.
• Letters to the Registrar: registration and other matters needing his approval or information.

Important terms

• Correspondence (पत्रव्यवहार) – written communication.
• Notice – letter informing members of a meeting's date, time and place.
• Agenda (विषयपत्रिका) – list of subjects to be discussed in a meeting.
• Quorum – minimum members needed for a meeting; if absent, the meeting is adjourned for half an hour.

Formats and formulas

5 important questions

Q1. Who is the chief of the correspondence section of a co-operative society?

The secretary.

Q2. What is an agenda?

The list of subjects to be discussed in a meeting, sent with the notice.

Q3. State the importance of correspondence.

It saves time, money and labour, serves as legal evidence, builds relations and goodwill, and helps business grow.

Q4. Draft a notice of the annual general meeting of a co-operative society.

Heading, reference and date; "Notice is hereby given that the annual general meeting will be held on (date, time, place)"; agenda: confirm last minutes, adopt report and accounts, approve dividend, appoint auditor, any other subject with the chairman's permission; quorum note; secretary's signature.

Q5. Draft a reminder letter to a loan defaulter.

Refer to the loan and due date; state the overdue amount; request payment within a fixed time; warn of action under the bye-laws; signed by the secretary.

Exam tip

Letter-drafting questions carry good marks. Always show the full layout: heading, reference, date, address, subject, salutation, body, close and signature.

Quick summary

The Commissioner and Registrar of Co-operative Societies is the officer appointed by the state government to register, guide and control co-operatives. In Maharashtra, all co-operative societies come under the Commissioner and Registrar, whose office is at Pune. This chapter covers the meaning, role, functions, powers and responsibilities of the Registrar.

Key points

• Definition: under section 2(24) of the MCS Act, 1960, the person appointed as Registrar of co-operative societies under the Act.
• Administrative structure: State – Commissioner and Registrar (Pune); Division – Joint Divisional Registrar; District – District Deputy Registrar; Taluka – Deputy / Assistant Registrar.
• Maharashtra has nine co-operative divisions: Mumbai, Pune, Aurangabad, Nagpur, Amravati, Nashik, Konkan, Kolhapur and Latur.
• Role: representative of government, leader, liaison officer, guardian, guide, strict administrator, arbitrator, and creator, guardian and liquidator of societies.
• Statutory functions: registration, approval of bye-laws, registration certificate, membership approval, classification, calling meetings, investment of funds, arbitration, amalgamation and division of societies.
• Controlling functions: watching administration, audit, control of financial dealings, action against societies, implementing government policy.
• Development functions: leading the sector, general and technical guidance, financial help, faster loan recovery, education and training.
• Powers: register a society, approve bye-laws, seize records, cancel registration, grant membership, call meetings, appoint auditor, amalgamate societies, classify them, give decisions.

Important terms

• Registrar (निबंधक) – officer who registers and controls co-operatives.
• Joint Divisional Registrar – controls co-operatives at the division level.
• District Deputy Registrar – registers and controls societies in a district.
• Assistant Registrar – chief authority at the taluka level.
• Liquidator – person who winds up a society that is dissolved.

Formats and formulas

5 important questions

Q1. Where is the office of the Commissioner and Registrar of Maharashtra?

At Pune.

Q2. How many co-operative divisions are there in Maharashtra?

Nine: Mumbai, Pune, Aurangabad, Nagpur, Amravati, Nashik, Konkan, Kolhapur and Latur.

Q3. Explain the role of the Registrar as a guardian and guide.

He protects members' and societies' interests, checks malpractice, and gives legal, technical and financial guidance for healthy growth.

Q4. Explain the statutory functions of the Registrar.

Registration, bye-law approval, certificate, membership approval, classification, calling meetings, deciding fund investment, arbitration, amalgamation and division.

Q5. State the powers of the Registrar.

Registration and cancellation, bye-law approval, seizing records, granting membership, calling meetings, appointing auditors, amalgamation, classification and giving decisions.

Exam tip

Divide the Registrar's functions into statutory, controlling and development headings; examiners look for this grouping.

Quick summary

Co-operative societies in Maharashtra work under the Maharashtra Co-operative Societies Act, 1960. This chapter studies two practical parts of it: how a society raises capital, and the meetings of members and of the managing committee, with the legal rules for meetings.

Key points

• A society's own capital is rarely enough, so it uses several sources.
• Internal (owned) sources: share capital, entrance fees, reserve fund, members' deposits.
• External (borrowed) sources: non-members' deposits, loans and advances, debentures, government grants and subsidies, gifts and donations.
• Every profit-making society must put at least 25% (¼) of its profit into the reserve fund.
• Members' meetings: first general body (statutory) meeting – called by the chief promoter (rule 59); annual general body meeting; special general body meeting (rule 76) for urgent matters; last general meeting after dissolution.
• The annual general meeting must be held within six months of the end of the financial year, that is, before 30 September. It reviews the year's work and decides future policy.
• A special general meeting can be called on written requisition by one-fifth of members (or the number in the bye-laws, whichever is less); it must be called within one month.
• Managing committee meetings: first meeting, regular meetings (monthly or every three months, as per bye-laws) and sub-committee meetings.
• Quorum: general meeting – 1/5 of members or 25, whichever is less; committee meeting – 1/3 or 5, whichever is less. Without quorum the meeting is adjourned (usually by 30 minutes).
• Legal points for meetings: notice, agenda, quorum, chairman, method of voting, adjournment, motion, resolution, casting vote, minutes.

Important terms

• Share – smallest unit of share capital.
• Dividend (लाभांश) – return on shares paid out of profit.
• Debenture (कर्जरोखा) – written acknowledgement of a debt by the society.
• Motion – a proposal placed before a meeting.
• Resolution (ठराव) – a decision taken by majority on a motion.
• Minutes (इतिवृत्त) – written record of a meeting's proceedings.

Formats and formulas

• Reserve fund = at least 25% of net profit.
• Quorum (general meeting) = 1/5 of members or 25, whichever is less.
• Quorum (committee) = 1/3 of members or 5, whichever is less.

5 important questions

Q1. What part of profit must go to the reserve fund?

At least 25% (one-fourth) of the profit.

Q2. Before which date must the annual general meeting be held?

Within six months of the financial year's end, that is, before 30 September.

Q3. State the internal and external sources of capital.

Internal: share capital, entrance fees, reserve fund, members' deposits. External: non-member deposits, loans, debentures, government grants, gifts and donations.

Q4. Explain the types of members' meetings.

First general (statutory) meeting by the chief promoter; annual general meeting before 30 September; special general meeting for urgent matters on requisition; last general meeting after dissolution.

Q5. Explain any five legal provisions about meetings.

Proper notice and agenda; quorum; a chairman to conduct it; voting method and casting vote; motion and resolution; written minutes.

Exam tip

Write the quorum rules exactly ("whichever is less"); they are frequently asked as short notes.

Quick summary

A co-operative society must keep proper books of accounts so that members, the Registrar and the auditor can see its true position. This chapter covers the books a society keeps, its financial statements, and audit – its meaning, types, classification, advantages and the legal rules under the MCS Act, 1960.

Key points

• The co-operative year is 1 April to 31 March for all societies.
• Books of accounts: journal and its subsidiary books, ledger, cash book.
• Statutory books (compulsory by law): members' register, active/inactive members' register, share register, debenture register, minute books of general and committee meetings, stock, asset, investment, dead-stock, loan, deposit registers, and audit rectification register.
• Non-statutory books (kept for convenience): inward and outward registers, complaint book, remark book, notice book.
• Financial statements: trial balance, trading account, profit and loss account, balance sheet.
• Audit is the checking of books and vouchers to see whether the surplus and financial position are shown correctly.
• Types of audit: statutory (annual) audit – within four months of the year's end, by an auditor approved under government rules; continuous audit; internal audit; interim audit.
• Audit classes (on 100 marks): A – about 60 and above (sound, overdues below 10%); B – 50 to 59; C – 35 to 49; D – below 35 (poor management).
• Advantages: true financial position, accurate accounts, checks errors and fraud, builds members' trust, helps get loans, gives advice on accounts.
• The auditor may attend the annual general meeting; the Registrar can order a re-audit.
• Audit reports: general audit report and audit rectification report (the society's reply correcting the faults).

Important terms

• Audit (हिशेब तपासणी) – checking books of accounts and vouchers.
• Statutory books – books compulsory under the Act.
• Trial balance – statement of debit and credit balances of ledger accounts.
• Balance sheet (ताळेबंद) – statement of assets and liabilities on a date.
• Audit class – grade (A–D) given to a society after audit.

Formats and formulas

5 important questions

Q1. What is the co-operative year?

1 April to 31 March.

Q2. Within what time must the statutory audit be done?

Within four months after the end of the financial year.

Q3. Distinguish between statutory and non-statutory books.

Statutory books are compulsory under the Act (member, share, minute, loan registers). Non-statutory books are kept for convenience (inward, outward, complaint, remark, notice books).

Q4. Explain the types of audit.

Statutory audit after the year ends; continuous audit through the year; internal audit by the society's own staff; interim audit between two statutory audits to find interim profit.

Q5. Explain the audit classification of co-operative societies.

Societies are marked out of 100 and graded A, B, C or D, based on finances, loan recovery and management (see table).

Exam tip

Learn the audit-class table; "match the pair" and short-note questions use these marks.

Quick summary

Urban co-operative banks give financial help to artisans, small traders, salary earners and small producers in towns and cities. Today they offer almost all the services of a commercial bank and build the saving habit in urban and semi-urban areas. This chapter covers their meaning, functions, problems and remedies.

Key points

• India's first co-operative bank (credit society), "Anyonya Sahayakari Mandali", began at Baroda on 5 February 1889 under Vitthal Laxman (Bhausaheb) Kavathekar.
• Banking Regulation Act, 1949: a primary co-operative bank whose paid-up share capital and reserves are more than ₹1 lakh and which does general banking business.
• Functions:

1. Accepting deposits (savings, current, fixed, recurring).
2. Granting loans and overdrafts.
3. Acting as agent (collecting cheques, paying bills).
4. Discounting bills of exchange.
5. Safe deposit lockers.
6. Modern services – ATM, NEFT, RTGS, mobile banking.
7. Loans for self-employment.
8. Quick service; financial advice; staff training.

• Problems: unproductive loans, lack of training, shortage of funds, inefficient management, unbalanced growth, rising overdues, faulty loan policy, dual control (RBI and the co-operative department), political interference, slow adoption of modern services.
• Remedies: productive loans, staff training, more capital, efficient management, balanced growth, strict recovery, simple loan rules, single control, honest board of directors, modern banking.

Important terms

• Urban co-operative bank (नागरी सहकारी बँक) – co-operative bank serving towns and cities.
• Overdraft – permission to a current account holder to withdraw more than the balance.
• Bill of exchange – a creditor's written order, accepted by the debtor, to pay a sum on a future date.
• Dual control – control by both the RBI and the state co-operative department.

Important dates and people

• 5 February 1889 – first co-operative bank at Baroda (V. L. Kavathekar).
• 1949 – Banking Regulation Act.

5 important questions

Q1. Where was India's first co-operative bank started?

At Baroda, on 5 February 1889, under Vitthal Laxman Kavathekar.

Q2. What is dual control?

Joint control over urban co-operative banks by the RBI and the co-operative department.

Q3. State any four functions of an urban co-operative bank.

Accepting deposits; giving loans; discounting bills; locker facility.

Q4. Explain the problems of urban co-operative banks.

Unproductive loans, rising overdues, weak management, shortage of funds, dual control, political interference, lack of training and modern services.

Q5. Suggest remedies for the problems of urban co-operative banks.

Productive lending, strict recovery, training, more capital, single control, honest directors, modern technology.

Exam tip

Problems and remedies match point by point; write them in pairs to save time.

Quick summary

India's co-operative credit has a three-tier structure, and the District Central Co-operative Bank (DCCB) stands in the middle. It is formed by the primary credit societies of a district. It lends to them and also supervises and controls them. Every district has one.

Key points

• The first Co-operative Act (1904) allowed only primary credit societies. The second Act of 1912 allowed central societies, which gave rise to district central banks.
• Meaning: a federation of primary credit societies in a district that gives them loans and supervises and controls them.
• Its working area is the whole district; head office at the district place, with branches in talukas.
• Functions:

1. Accepting deposits from societies and individuals.
2. Lending to primary societies – short, medium and some long-term loans.
3. Acting as the bank of co-operative societies of the district.
4. Working as a bank for the state government (e.g. paying subsidies).
5. Opening new branches.
6. Leading the district co-operative movement.
7. Loans on security.
8. Supervising, controlling and guiding primary societies.
9. Balancing credit supply in the district.
10. Consumer services – lockers, NEFT, RTGS.

• Problems: limited capital, faulty lending, delay in loans, rising overdues, weak management, low deposits, high interest, political interference, poor supervision, unbalanced growth.
• Remedies: more capital and deposits, quick and easy loans, strict recovery, efficient management, lower interest, freedom from political pressure, better supervision, balanced growth.

Important terms

• DCCB (जिल्हा मध्यवर्ती सहकारी बँक) – district-level co-operative bank in the middle tier.
• Short-term loan – 3 to 15 months.
• Medium-term loan – 1 to 5 years.
• Long-term loan – 5 to 25 years.
• NABARD – National Bank for Agriculture and Rural Development; refinances co-operative banks.

Formats and formulas

5 important questions

Q1. Which Act made district central banks possible?

The Co-operative Societies Act of 1912.

Q2. What is the period of a medium-term loan?

1 to 5 years.

Q3. Why is the DCCB called the central bank of the district?

It stands in the middle of the three-tier structure, links primary societies with the state bank, and lends to and controls the societies of the district.

Q4. Explain the functions of a DCCB.

Deposits, loans to primary societies, bank of district co-operatives and government, new branches, leadership, supervision and control, balanced credit, modern services.

Q5. State the problems of DCCBs and their remedies.

Limited capital, delays, overdues, weak management, political interference; remedies: more capital, quick loans, recovery drives, trained management, freedom from politics.

Exam tip

Remember loan periods (3–15 months, 1–5 years, 5–25 years); they are common one-mark questions.

Quick summary

The State Co-operative Bank is the apex (top) bank of the three-tier co-operative credit structure. It is the federation of all district central co-operative banks in the state. The Maclagan Committee (1914–15) stressed the need for such a bank. Maharashtra's apex bank is the Maharashtra State Co-operative Bank, head office Mumbai.

Key points

• Structure: primary credit societies (village) → district central co-operative banks (district) → State Co-operative Bank (state).
• The Maclagan Committee was set up in 1914 and reported in 1915, highlighting the importance of a state co-operative bank.
• The bank was established on 11 October 1911 in the Bombay (Mumbai) province. There is one apex bank for every state.
• Meaning: a bank that lends to district central co-operative banks and supervises and controls them.
• Functions:

1. Accepting deposits.
2. Granting loans to co-operative societies and DCCBs.
3. Supervising the use of loans.
4. Co-ordinating the work of co-operatives.
5. Linking the co-operative sector with the money market and the RBI/NABARD.
6. Providing banking services.
7. Loans to rural industries (e.g. sugar factories, spinning mills).
8. Balancing credit supply across the state.
9. Branch expansion.
10. Leadership of the co-operative movement.

• Problems: inadequate capital and deposits, faulty loan supply, rising overdues, poor supervision, improper investment, lack of planning, neglect of medium-term loans, inefficient management.
• Remedies: raise capital and deposits, proper loan allocation, recovery drives, better supervision, sound investment, planning, efficient management, balanced development.

Important terms

• Apex bank (शिखर बँक) – topmost bank in the co-operative banking structure.
• Money market – market for short-term loans between banks and financial institutions.
• Personal loan – loan given to a person on individual security.
• Federation – union of lower-level institutions.

Important dates and people

• 11 October 1911 – State Co-operative Bank established in Mumbai province.
• 1914–1915 – Maclagan Committee and its report.

5 important questions

Q1. Why is the State Co-operative Bank called the apex bank?

It stands at the top of the three-tier co-operative credit structure.

Q2. Where is the head office of the Maharashtra State Co-operative Bank?

In Mumbai.

Q3. What did the Maclagan Committee recommend about the state bank?

In its 1915 report, it stressed the need for an apex co-operative bank in each province.

Q4. Explain the functions of the State Co-operative Bank.

Deposits, loans to DCCBs and societies, supervision of loans, co-ordination, link with the money market, banking services, loans to rural industries, balanced credit, leadership.

Q5. Explain the problems of the State Co-operative Bank.

Low capital and deposits, faulty loan system, overdues, weak supervision, improper investment, lack of planning, neglect of medium-term loans, inefficient management.

Exam tip

Draw the three-tier chart and mark the apex bank at the top; it supports almost every answer in Chapters 6–8.

Quick summary

Co-operatives succeed only when members, leaders and staff understand co-operation and have the skills to run a society. Co-operative education gives knowledge of co-operative principles and aims; co-operative training gives practical skills such as office work and accounts. This chapter covers the history, objectives, need, structure and main institutes of co-operative education and training.

Key points

• 1915: the Maclagan Committee stressed co-operative education and training.
• 1917: S. C. Talmaki presented an essay on co-operative education; in 1918 the Mumbai Central Co-operative Institution was founded (today's Maharashtra State Co-operative Union/Federation).
• 1951: the A. D. Gorwala Committee also recommended education and training.
• Objectives: explain co-operation, attract people to the movement, make members aware and responsible, build capable leaders, give knowledge of principles and procedures, develop business skills, control corruption, supply trained staff, ensure healthy growth.
• Need: leadership, development of societies, efficient management, educated members, faith in co-operation, independence of the sector, checking malpractice, active member participation.
• Structure: National Co-operative Union of India at the top → Maharashtra State Co-operative Union → divisional boards, district boards and co-operative training centres.
• Main institutes:
• Vaikunth Mehta National Institute of Co-operative Management (VAMNICOM), Pune – national level, set up in 1967.
• Padmashree Dr. Vitthalrao Vikhe Patil Institute of Co-operative Management, Pune – set up in 1947 as the Co-operative Training College; the country's first co-operative training institute.
• Dr. Dhananjayrao Gadgil Institute of Co-operative Management, Nagpur – set up in 1972; trains officers and staff.

Important terms

• Co-operative education (सहकार शिक्षण) – knowledge of co-operative principles, aims and working.
• Co-operative training (सहकार प्रशिक्षण) – practical skill in office work, accounts and management.
• VAMNICOM – national institute for co-operative management at Pune.

Important dates and people

• 1915 – Maclagan Committee; 1918 – Mumbai Central Co-operative Institution.
• 1947 – Vikhe Patil Institute, Pune; 1967 – VAMNICOM, Pune; 1972 – Gadgil Institute, Nagpur.

5 important questions

Q1. Distinguish between co-operative education and training.

Education gives knowledge of principles and aims to members; training gives practical skills (accounts, office work) to staff and office bearers.

Q2. Where and when was VAMNICOM set up?

At Pune, in 1967.

Q3. Which was the first co-operative training institute in India?

The Co-operative Training College, Pune (1947), now the Padmashree Dr. Vitthalrao Vikhe Patil Institute of Co-operative Management.

Q4. State the objectives of co-operative education and training.

Spread the idea of co-operation, aware members, capable leaders, knowledge of procedures, business skills, control of corruption, trained manpower, balanced growth.

Q5. Explain the need for co-operative education and training.

It builds leadership, efficient management, educated and active members, faith in co-operation, independence of the sector and checks malpractice.

Exam tip

Make a three-line table of the institutes (name – place – year); it answers many short questions.

Quick summary

India adopted the New Economic Policy in 1991 – liberalisation, privatisation and globalisation (LPG). The economy became linked with the world market, and co-operatives now compete with private and multinational firms. This chapter lists the main challenges before the co-operative sector and the remedies to meet them.

Key points

• Open competition, falling government support and new technology changed the conditions in which co-operatives work.
• Challenges:

1. Raising enough capital.
2. Rising cost of production.
3. Expanding the market against big private brands.
4. Less government aid and grants.
5. Qualitative (not just numerical) development.
6. Inefficient management.
7. Lack of organised, united effort.
8. Satisfying consumers on quality, price and service.
9. Taking part in rural development.
10. Growing political interference.
11. Recovery of loans.
12. Modernisation and use of technology.

• Remedies:

1. Build members' trust and efficiency.
2. Use modern technology (computers, online services).
3. Effective advertising and branding.
4. Economic independence – less dependence on government.
5. Training of employees.
6. Qualified, professional management.
7. Organisational change suited to new times.
8. Efforts for consumer satisfaction.
9. Work for rural development.
10. Modern banking services.
11. Strict loan recovery.
12. Control on political interference.

Important terms

• Liberalisation – reducing government controls on business.
• Privatisation – larger role for the private sector.
• Globalisation (जागतिकीकरण) – linking the national economy with the world economy.
• Professional management – running a society through trained, qualified managers.

Important dates and people

• 1991 – New Economic Policy (LPG) adopted in India.

5 important questions

Q1. When did India adopt the New Economic Policy?

In 1991.

Q2. What does LPG stand for?

Liberalisation, Privatisation and Globalisation.

Q3. Why is raising capital a challenge for co-operatives?

Members are mostly from weaker sections, shares are of low value and government aid is falling, so funds for expansion and modernisation are short.

Q4. Explain any six challenges before the co-operative sector.

Capital shortage, rising production cost, market competition, less government aid, inefficient management, political interference (also loan recovery and modernisation).

Q5. Suggest remedies to face these challenges.

Modern technology, professional management, staff training, advertising, economic independence, loan recovery, consumer focus, freedom from political interference.

Exam tip

Link each challenge to its remedy in your answer; examiners reward this matching.