Government Strengthens Multi?State Cooperative Societies Law
ECONOMY & POLICY

Government Strengthens Multi?State Cooperative Societies Law

The Multi?State Cooperative Societies (MSCS) (Amendment) Act and rules, notified in August 2023, aim to strengthen governance, enhance transparency and increase accountability by supplementing existing law and incorporating the ninety?seventh Constitutional Amendment. The amendments establish a Cooperative Election Authority, provide for a Co?operative Ombudsman and require an information officer to improve member access to information. Directors are disallowed from participating in decisions where they or their relatives have an interest and additional disqualification grounds have been introduced.

Boards must include non?unanimous decisions in annual reports, constitute audit and ethics committees, and meet prescribed quorum and chief executive officer appointment criteria to improve oversight. Central determination of accounting and auditing standards and prudential norms for thrift and credit businesses will ensure uniformity and financial discipline. The Central Registrar may inquire into suspected fraudulent conduct and pursue winding up where registration was obtained by misrepresentation.

The amendments introduce concurrent audit for societies with turnover or deposits exceeding five billion (bn) Rs and notify two panels of auditors for entities below and above that threshold to conduct statutory and concurrent audits. Concurrent audit is intended to enable early detection of irregularities and prompt corrective action. Annual returns with audited statements, board decision details and related party disclosures must be filed online with the Central Registrar within six months of the accounting year end or risk disqualification under section 43.

The National Cooperative Database (NCD) provides single?point access to information on cooperative societies nationwide and records 0.848 million (mn) societies as of 20 January 2026, of which 0.658 mn are functional, 0.141 mn are non?functional and 49,179 are under liquidation. The ministry is promoting conversion of primary agricultural credit societies, dairy and fisheries cooperatives into multipurpose societies to diversify activities and strengthen sustainability and has established a Co?operative Rehabilitation, Reconstruction and Development Fund to revive sick societies and meet infrastructural needs. State?wise data will guide formation of 0.2 mn new multipurpose societies to improve coverage.

The Multi?State Cooperative Societies (MSCS) (Amendment) Act and rules, notified in August 2023, aim to strengthen governance, enhance transparency and increase accountability by supplementing existing law and incorporating the ninety?seventh Constitutional Amendment. The amendments establish a Cooperative Election Authority, provide for a Co?operative Ombudsman and require an information officer to improve member access to information. Directors are disallowed from participating in decisions where they or their relatives have an interest and additional disqualification grounds have been introduced. Boards must include non?unanimous decisions in annual reports, constitute audit and ethics committees, and meet prescribed quorum and chief executive officer appointment criteria to improve oversight. Central determination of accounting and auditing standards and prudential norms for thrift and credit businesses will ensure uniformity and financial discipline. The Central Registrar may inquire into suspected fraudulent conduct and pursue winding up where registration was obtained by misrepresentation. The amendments introduce concurrent audit for societies with turnover or deposits exceeding five billion (bn) Rs and notify two panels of auditors for entities below and above that threshold to conduct statutory and concurrent audits. Concurrent audit is intended to enable early detection of irregularities and prompt corrective action. Annual returns with audited statements, board decision details and related party disclosures must be filed online with the Central Registrar within six months of the accounting year end or risk disqualification under section 43. The National Cooperative Database (NCD) provides single?point access to information on cooperative societies nationwide and records 0.848 million (mn) societies as of 20 January 2026, of which 0.658 mn are functional, 0.141 mn are non?functional and 49,179 are under liquidation. The ministry is promoting conversion of primary agricultural credit societies, dairy and fisheries cooperatives into multipurpose societies to diversify activities and strengthen sustainability and has established a Co?operative Rehabilitation, Reconstruction and Development Fund to revive sick societies and meet infrastructural needs. State?wise data will guide formation of 0.2 mn new multipurpose societies to improve coverage.

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