Less than a decade after cooperatives were recognized as a pillar of economic development, various comments, debates and suspicions are being expressed about it by the people, civil society and policy makers, and public representatives from the streets to the House.

In spite of the contribution made by cooperatives in job creation, capital mobilization, economic empowerment, maintaining social harmony, now an ironic situation has arisen where they have to speak publicly in favor of cooperatives. 

Since the co-operative could not return the money of the savers, last year the government formed a co-operative sector reform task force to determine the problem and make a diagnosis. The House of Representatives has formed a special parliamentary investigation committee on misappropriation of savings funds in view of the fact that even politicians have taken loans from some cooperatives and failed to pay back the money of the savers. 

In the last 2 decades, about 1 dozen study committees were formed, millions of funds were spent, reports were understood and filed away. As there is confusion among the bodies responsible for implementing the recommendation reports, this process has become like a continuous ritual. 

The parliamentary special committee has pointed out that the problem has arisen due to cooperatives dealing with savings and loans, which are basically urban and in many districts. 62 thousand 760 savers made a demand equal to 39 billion 93 crore 56 lakh 66 thousand 710 rupees against 22 problematic cooperatives declared by the problem cooperative management committee under the association.

Although the money has started to be returned from a total of 13 troubled cooperatives, so far 4,472 savers of 3 cooperatives have been fully refunded. Others are yet to be returned. It is estimated that 18 cooperatives and other cooperatives that are problematic, which have been publicly discussed, are stuck without being able to return the savings amount.

The story-pain of those organizations not even raising interest is different. According to the standards, the amount that should be arranged in the risk-bearing fund for good, poor and bad loans is not allocated, not only is it problematic and problem-oriented, it can be assumed that the loans invested by most of the cooperatives are at high risk. 

problems seen in cooperatives  

study reports have shown that cooperatives invest more than 60 percent without collateral, set up companies and invest in land purchases, housing and hospitals, take loans, take tamsuk, take mortgages, one person saves crores of money in one cooperative for the sake of high interest, the directors become managing directors and employ their own family members as employees.

It has been pointed out that such co-operatives have a tendency to trample principles, values, legal system and do voluntary work, extreme politicization, rewards, incentives, promotions, etc. The root of the problem has been found to be the fact that the directors of the cooperatives only focus on their own benefits. 

Constitution, how to organize the targeted people and mobilize their labor, skills, abilities, capital and talent, not only accepted from the political economic point of view, but also democratic, equitable, self-reliant and socially just, how to protect the reputation of the cooperative system? Now a serious challenge has arisen before the nation. It is not possible to put all the cooperatives in one place, but based on the reports of the study task force and the parliamentary committee, the root of the problem in most of the cooperatives is internal mismanagement.

Dimensions of Good Governance

Good governance is very essential for any organization/institution, firm or company adopting a 'corporate culture'. In order to maintain good governance in cooperatives, it is necessary to adopt all 3 aspects of organized external governance, collective internal governance and individual governance. Accountability of cooperatives to the public sector and stakeholders, transparency of transactions through full financial disclosure, protection of assets, external monitoring and compliance with laws etc. fall under organized external governance. For this, the regulatory body, management and accounting supervision committee, chairman, chief manager and auditor have an ego role. 

According to the concept of self-regulation, the accountability of directors to the general assembly, member participation, periodic elections of the board of directors, accounting supervision committee, rights of managers, internal democracy, etc. are seen in collective internal governance.

This includes planning, program and member-centered sustainable activities and their honest and responsible implementation, organization operation, information management system, risk assessment and compensation plan, etc. must be followed. A private business is profit-oriented, while a cooperative business where investors and consumers are the same is a service-oriented business, giving priority to reasonable prices and quality goods/services based on the needs of members, and limited dividends are expected on investment.

Who is guilty?

With the growth of cooperative organizations, monitoring of ritual mercury is another important factor in the current problem, not at the rate and level that should be monitored by the government. At any level, monitoring is still limited to formality. Let's improve the broken ones as much as possible, if not, don't let other institutions deteriorate. But the initiative is not visible.

In 2059, a mechanism was formed under the leadership of the then National Cooperative Association for joint monitoring to improve the poor image of cooperatives, and the technical sub-committee formed under it included the relevant ministries, cooperative development ward, and the chief officials of the cooperative department.

Today, cooperatives and their managers are to blame for this state of cooperatives, but the government is also not less to blame. After the Cooperatives Act 2048 was promulgated, there was a wave of establishment of many cooperative societies in various subjects. In the name of the recommendation of the Public Expenditure Review Commission of 2057, the government limited the cooperative offices of 68 districts that regulate cooperatives to divisional cooperative offices in 38 districts with 5 training centers.

When the cooperative organizations are expanding and becoming nationwide, how far-sighted the move to reduce the regulatory body was, let history evaluate that. Reducing cooperative offices has now become suicidal and counterproductive for the state. Out of the current 31,450 cooperatives, more than 22,000 cooperatives have been transferred to the local level, while about 6,000 cooperatives are in the provinces. There are only 125 organizations with a nationwide scope under the association.

Almost all cooperatives in trouble now are nationwide. The department is also to blame for the problems faced by cooperatives under the regulatory jurisdiction of the Federal Cooperatives Department. A glaring example of this is Gautam Shree Cooperative, which was monitored by the Cooperative Department 6 months before it ran into trouble 2 years ago. How did these cooperatives get into trouble? There can be 2 reasons for this. First, there was an unintended compromise or compromise on monitoring. Second, monitoring remained limited to formality. 

The way forward 

It is the primary responsibility of all the regulatory and cooperative organizations to bring the three governments and campaign to the governance scope with mutual coordination and commitment. There is no doubt that the problem will be reduced if there is policy clarity, localization of work area, use of technology, qualified manpower arrangement, updated information management system, penalties and rewards, effective monitoring on cooperatives at all levels.

Co-operatives are self-regulating organizations but this means that co-operatives should not be subject to external monitoring, inspection and supervision, it is wrong to think that autonomy is interfered with. At least, the situation can be expected to improve even if there is a regular practice of regular on-site and off-site monitoring and reporting and investigation by the regulatory body. 

Co-operative campaigners should also take notice to bring the current situation to a rhythm. The recently revised Cooperative Act 2074, which was established with the purpose of monitoring and regulating cooperatives that deal mainly with savings and loans, had the general expectation that the National Cooperative Regulatory Authority would work with the same kind of autonomy.