Reining in unscrupulous cooperative societies

The expectation has been that the organised criminality in the name of cooperatives would be curbed substantially, following the amendment to the Cooperative Societies Act in 2013. Although incidents of swindling and public harassment are not making headlines in recent times, instances of fraud affecting mostly the urban and rural poor have not stopped. Mushrooming growth of cooperative societies across the country over the last two decades has seen how the machinations of these agencies were, for the most part, used to allure their clients, especially the poor, to gain quick returns on their money. This was one of the reasons why the Cooperative Societies Act was amended last year.
A good number of the so-called cooperative societies were known for their money-multiplying skills through investing people's money in 'highly profit generating' businesses. These have been operating under the very nose of the authorities in their apparently laudable endeavours to boost investment, even from the most unlikely of the businesses. Potential clients of these societies were initially the rural poor who considered it highly worthwhile to invest in the magical money-multiplying machine. Over time, their network began to spread out to urban locations as well, where it is the migrating poor from rural areas who are quick to be drawn into the trick.
The amended Act has admittedly brought some changes to the forms of restrictions on the mode of operation of the societies, which among others, include barring them from using the word 'bank' to their names. The law , being aimed mainly at restricting these societies from banking activities, stipulates that no cooperative society can run banking business or collect deposits from any individual or institution without prior approval of the central bank. Deposits should be kept in a particular account but the money cannot be withdrawn without joint signatures of the registrar and the concerned cooperative society. But observers are of the view that there remains a huge grey area that can still be capitalised by many of the unscrupulous societies.
Many fake 'societies' are allegedly still in operation, especially in rural areas, where clients are least concerned about the government's laws and regulations. Thriving of the societies is made easy by their clients in the absence of effective awareness drive and enforcement measures.  Monitoring of the activities by such societies, in strict sense of the term, is not possible because of the lack of transparency. Worse still, it has been found that clients hardly raise their voice against the misdeeds of the so-called societies unless, however, they are taken for a ride. The central bank, too, has not been empowered with sufficient powers to closely oversee and take punitive actions in case of malpractices. The authority of the Registrar has also not been sufficiently strengthened to address critical situations that call for immediate intervention. Notably, regular monitoring of the operations of the cooperative societies is often impeded by dearth of competent manpower, non-application of available technology and so on. Preparation of a comprehensive database of all cooperative societies in the country would have been a starter to facilitate enforcement on the one hand and discourage the operation of unscrupulous cooperative societies, on the other.