Co Operatives Mgmt

8/3/2019 Co Operatives Mgmt

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Co-operatives

Definition:An autonomous association of persons united voluntarilyto meet their

common economic, social, and cultural needs and aspirations through ajointly-owned and democratically-controlledenterprise.

International Co-operative Alliance (ICA) Objectives of Cooperatives:

Service to the society Self help and mutual help Equal distribution of income and wealth (no profit motive) Control of monopoly (collective bargain) Removal of middlemen (direct selling/procurement) Improve the economic status of weaker section Protection of consumers (consumer awareness & rights) Development of certain economic activities (eg silkworm, honey, fruit

processing etc)

Reduction in cost of production (economies of scale/sharing)

Principles of Co-op: Voluntary and open membership

(iro caste, status, gender) Democratic management

(participation in decision making, each member single vote) Members contribution

(equal contribution towards capital) No or limited interest on capital

(no profit motive, restrictions on distribution of income, reserves tomaintain)

Education, training to members (increase awareness among members about their rights)

Autonomy and independence


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(member and society separate legal status and it is a autonomousbody ie able to enter into contract with third party)

Co-operation among co-operatives (start a movement)

Concern for community (service to members & society)

Classification of co-operativesOn the basis of object

1. Co-operative Marketing societyThese societies are formed by small producers and manufacturers who find it

difficult to sell their products individually. The society collects the products

from the individual members and takes the responsibility of selling those

products in the market. Gujarat Co-operative Milk Marketing Federation that

sells AMUL milk products is an example of marketing co-operative society

Agricultural Marketing society

Marketing of agricultural produce Procurement of requisites for agricultural production members are agriculturists

2. Apex society area of operation is whole state of Maharashtra provide facilities, services to other societies3. Co-operative Bank

Soc. Providing banking services to its members and society under Bankingco.s Act

Soc. Formed as Agricultural and Rural development Bank4. Crop protection society

These societies are formed to aid the farmers in protection of their fields,

crops, equipments etc

5. Co-operative Farming Society:

These societies are formed by small farmers to work jointly andthereby enjoy the benefits of large-scale farming. sharing of land,

equipments etc.

6. Federal Society

At least 5 members are societies themselves with having not less than

4/5 of the total number of votes


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7. Lift Irrigation Society

With the object of which is to provide water supply to members for

irrigation and otherwise.

8. Processing Society

The object is processing of goods Agricultural processing societies (e.g. sugarcane juice into jaggery,

tinning of fruits etc)

Industrial Processing societies (e.g. cotton seeds crushing, alcoholprod, paper factories etc.)

9. Producers Co-operative Society:

These societies are formed to protect the interest of small producers by

making available items of their need for production like raw materials, tools and

equipments, machinery, etc. Handloom societies like APPCO, Bayanika, Haryana

Handloom, etc., are examples of producers co-operative society

10. Consumer Society

These societies are formed to protect the interest of general consumers by

making consumer goods available at a reasonable price. They buy goods directly

from the producers or manufacturers and thereby eliminate the middlemen in

the process of distribution. Kendriya Bhandar, Apna Bazar and Sahkari Bhandar

are examples of consumers co-operative society.

11. Housing Co-operative Society:

These societies are formed to provide residential houses to members.

They purchase land, develop it and construct houses or flats and allot the same

to members. Some societies also provide loans at low rate of interest to

members to construct their own houses.

12. Co-operative Credit Society:

These societies are formed to provide financial support to the members. The

society accepts deposits from members and grants them loans at reasonable

rates of interest in times of need.

Problems of co-operatives:

Poor performance and loss of finance viability Not able to raise finance


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Remedy explore non-conventional avenues, issue non voting shares,reform in financial structure of co-op

Lack of professionalism in management Competitions by MNCs Undermanaged, mismanaged societies are increasing Failure to attract and retain managers Remedy junior level training centres, reorienting existing

management

Excessive Govt. control and political interference Key to vote bank Party politics while providing subsidies Remedy modify existing legislations

Lack of Good Leadership No vision, inspiration, guidance, dedication Capable to achieve the objective/purpose No ability to unite the members Remedy system of timely audit by independent authority, member

education

Poor board management relation Separate management from its board, members Managers control the function Remedy consider appointment for new managers as imp task

Lack of performance based reward

Let us now sum up

ADVANTAGES DISADVANTAGES

Easy formation Open membership

Limited Capital Problems in Management


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Democratic Control Limited Liability Elimination of MiddlemansProfit State Assistance Stable Life

Lack of Motivation Lack of Cooperation Lack of good leader

Formation of a Co-operative Society

A Co-operative Society can be formed as per the provisions of the Co-operative Societies Act, 1912.

Conditions of Registration At least ten persons having the capacity to enter into a contract

with common.

Each member from different family Resident of the area of operation of the society Soc. With unlimited liability all members must reside in the same

town/village/group of villages

In case of federal soc. must be registered with 5 societies. For the promotion of

Economic objectives, like farming, weaving, consuming, etc. canform a Co-operative Society.

The General Welfare of its membersThe word Limited or Unlimited must be used in the name

Co-operatives Management Aspects

A group of people come together to start a cooperative organization. Everyone is entitled to vote and elect a managing committee. The M.C. elects the Board of directors The BOD will appoint a chairman to head the co-op. The chairman will assist in selecting Executives (General Managers) and also

liaison with the Registrar of Co-op.


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The Secretary of the co-op arranges periodical meetings for BODs. MC andthe Chairman to review the progress of the co-op org.

Role and Functions of Managing Committee

To follow instructions of BOD To arrange for the meetings To draw agenda for the meeting and notices To make all arrangement for the meetings

Role and Functions of Board of Directors

To elect the Chairman Laying down policies, procedures as per bye-laws Registering new members & allotment of shares Maintaining records & its submission to registrar Preparing annual budget Raising resources Purchase & maintenance of assets & liabilities Investment of funds

Powers & Duties of Chairman

To supervise & maintain order during meetings To decide the order of the issues to be resoved To ensure smooth proceeding of the meetings To delete certain issues from the minutes To take the consensus of members To act as a neutral party To see that quorum is maintained To make sure that the Secretary has entered correct minutes


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Role and Functions of Secretary

Handling of day-today correspondence Maintain necessary books of accounts Duty to attend the meetings, record the proceedings, convening all the

meetings as per the rules

Prevent any misuse of the assets of the society Arrange for the audit and inspection and reporting to the necessary

authorities.

Registrar

Right from the Registration of a Cooperative Society till the cancellation of its

registration, the Registrar acts as friend, philosopher and guide to thecooperatives and ensures that Cooperative Societies function in accordance

with the Cooperative Act.

Statutory Functions

Registration of Cooperative Societies; Registration of amendments in the Bye-laws of Cooperative Societies; Amalgamation, Division and re-organization of Cooperative Societies; Ensure timely Election of the Managing Committee in Coop Societies; conduct

elections of Managing Committee in primary cooperative banks and federal

cooperative societies;

Ensure proper investment of funds by Coop Soc.as per Act and Rules; Conduct audit, order inspection, enquiry and also fixing surcharge on

negligent functionaries of cooperative societies;

Settle disputes of Cooperative Societies Order winding up and cancellation of registration of defunct/non-functional

societies.

Developmental and Promotional Functions

Operating Cooperative Education Fund for training, education, propagandaand publicity programme for the development of Cooperative Movement.


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Issue Instructions/directives for the promotion of business of differenttype of Cooperatives;

To see that every co-operative gets the assistance and guidance neededto develop and realize its full potentiality.

Presence of Cooperatives in India

During the British rule , Nicholson a British Officer in India suggestedto introduce Raiffersen model of German agricultural credit

Cooperatives in India. As a follow-up of that recommendation, the first

Cooperative Society Act of 1904 was enacted to enable formation of

Agricultural Credit Cooperatives in villages in India under Government

sponsorship. With the enactment of 1904 Act, Cooperatives were to

get a direct legal identity as every agricultural Cooperative was to be

registered under that Act only.

The National Cooperative Union of India (NCUI) was established in1929 as an apex promotional organization for strengthening of

cooperatives.

National Cooperative Development and Warehousing Board was set upin 1956.

Growth of Cooperatives in India

National Cooperative Development Corporation (NCDC) wasestablished in 1963 under NCDC Act 1962 to promote production,

marketing and export of agricultural produce.

Number of Cooperatives Societies increased from 35 thousand in1965-66 to 545 thousand in 2002-03.

Today, Cooperatives cover each & every village of India. Role of Cooperatives in Indian Economy

During the year 2002-03, Cooperatives accounted for: 46% of Agriculture Credit disbursement. 36% of fertilizer distribution. 59% of Sugar production. 32% of Wheat procurement. 65% of Storage facility.

In fertilizer production and distribution the Indian Farmers FertilizerCooperative (IFFCO) with a domestic annual capacity of producing 4.3

million tons of phosphatic fertilizers and 4.2 million tones of

nitrogenous fertilizers commands over 35 percent of the market with

more than 50 million farmers associated with it and.

In the production of sugar the cooperative share of the market is over58 percent and in the marketing and distribution of cotton they have a

share of around 60 percent.


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The cooperative sector accounts for 55 percent of the looms in thehand-weaving sector.

Cooperatives process, market and distribute 50 percent of edible oils. Dairy cooperatives operating under the leadership of the National

Dairy Development Board and through 15 state cooperative milk

marketing federations has now become the largest producer of milk in

the world.

Steps to strengthen the co-operative movement in India

Form a alliance or strategic partnership between the apex institutions Exchange of technical expertise and professional management

Political interference should be reduced Cooperation among co-operatives Govt should form a committee to educate the members of all the co-

operatives

Stringent rules so that no misappropriation of funds Cultivate the professional approach among members Reduce the Govt. interference in management Replicate the successful models of co-operatives like Amul Proper planning, strategy formulation and diversification to face the growing

competition from private players.

Housing Co-operative Society

These societies are formed to provide residential houses to members. They

purchase land, develop it and construct houses or flats and allot the same to

members. Some societies also provide loans at low rate of interest to

members to construct their own houses.

Types of Housing Co-operatives

o All the way co-operatives Society is formed first, it acquires land , develop the same, construct

houses and allot them to members on rent. Members are tenants only

o Co-venture co-operatives Two categories

Hire purchase system soc. acquires land, construct houses onapproval of members then allots them on HP basis.

Lease and construct - soc. acquires land, develops the same andhands over to members on lease or construct through soc.

Flat Ownership co-operatives A builder acquires the land, constructs the building and sells the flat on

ownership basis with a condition that the purchasers will form a

society which provides common services and amenities to members.


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Problems faced by Housing co-operatives

Lack of finance Scarcity of land and building material No federation society Lack of expertise Ever increasing cost of land Malpractices (by builders, engineers, promoters, agents, government

officials)

Credit Co-operative Societies

These societies are formed to provide financial support to the members. Thesociety accepts deposits from members and grants them loans at reasonable

rates of interest in times of need.

Objectives Encourage cooperation through saving Attract deposits Lend money at reasonable rate Invest funds

Types Short term Credit societies

Credit for seasonal agricultural operations For less than or = 12 months Purchase of seeds, fertilizers, payments to labourers

Long term Credit societies For more than 12 months to 5 years Purchase of capital goods Security is neccessay

Employees co-operativesLabour Co-operative Societies

This is a form of organisation for the employment of a group of workers whoassociate to work together for a joint reward.

Choose the work mates Select their leaders Undertakes some work as a group Arrange the details for the execution of work Contract for completion without supervision of any contractor Decides the basis of payment Distributes the profits

Objectives / Advantages No exploitation Provide necessary technical, financial aid


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Arranges employment to all workers Arrange for training Arrange for joint purchasing of goods Encourage cooperation habit.

Agricultural Produce Marketing Committee (APMC)

The APMC is a marketing board established by the state governments ofIndia.

In order to facilitate farmers to sell their produce and get reasonableprice.

Most of the APMC have market yard where traders and othermarketing agents are provided warehouses and shops for purchase of

agriculture produce from farmers.

Farmers can sell their produce to agents or traders under supervisionof APMC.

The Maharashtra Agricultural Produce Marketing (Regulation) Act waspassed in the year 1963, with a view to regulate the marketing of

agricultural and pisciculture produce in market areas.

Constitution

Every market shall consist of:

Agriculturists residing in the market area and being 21 years of age. (atleast 10)

Traders and commission agents holding license to operate in the marketarea.

Chairman of the co-operative society doing business of processing andmarketing of agriculture produce in the market area.

Chairman of the Panchayat Samiti within the jurisdiction in which themarket area is situated,

President or Sarpanch of the local authority within the jurisdiction of whichthe principal market is situated.

Deputy Registrar of Co-operative Society of the district.The Triple Role of Cooperatives

Cooperatives can play three roles: The Economic role: Employment, Growth, Finance economic

development;

The Social role: social services, community development,environment protection;

The Political role: Promotion of Democracy, Social dialogue, Freedomof association.


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The economic role provides opportunity, the social role provides protection,and the political role provides empowerment.

Role of Co-operatives

Economic Benefits No exploitation of poor or weaker section of society Reduce the rich and poor gap Control of monopoly Beneficial to society Increased customer satisfaction Restrictions of cheating, black marketing & manipulation Control on speculations Overall development of economy through better facilities (eg

warehouses, irrigation, equipments, shops/market places).

Educational / Political Benefits Education about administration, human values. Helps to strengthen democracy Encouraging Planning, coordinating and leadership qualities among

members

Social Benefits Reduced cost & price Quality products Equal distribution of income Improved standard of living Social awareness about rights and duties

Environment protection Protection to weaker section

Co operative Leadership

People coming together for achieving common objectives must have leaderswhose function is to take the initiative, assume responsibility for carrying

out policies and proposals, give directions and inspire and activate the

followers to achieve the objectives.

Act as -

Motivator (encourager) Manager (Decision maker ) Administrator (Implementer)

Role of Leader in co-operatives movement in India

Specific problems in developing countries


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Poverty, backwardness, social structure, unorganized groups, lack ofeducation & experience of business

Thus easily exploited Limitation of Govt. officials Rural and urban gap Challenges and competition

Leader who dont understand the conditions/problems, having no sympathyleads to distrust among members.

No training in the basic principles of co-operative management.Qualities of Leader

Honesty Sympathy Visionary Self Motivated & Motivator Decision Maker Initiator Clarity of Co-operative principles Understanding of specialized needs of co-operatives. Functions of Leader in a co-operative.

Institutional support for co-operatives

NABARD (National Bank for Agricultural and Rural Development) It is an apex institution accredited with all matters concerning policy,

planning and operations in the field of credit for agriculture and other

economic activities in rural area.

Established on 12th June 1982 50% of capital contributed by the RBI & 50% by Govt.

Functions

Monitors, formulate rehabilitation schemes, restructure creditinstitutions for improving credit delivery system

Co-ordinate the rural financing activities (institutions, state & centralgovt., RBI and other national level institutions concerned)

Prepares annual credit plans of all rural financial institutions. Monitors & evaluate projects which are refinanced by it. Provides short term loans (up to 18 months) to state co-operatives for

seasonal agricultural operations.

Provides medium term loans (18 mths to 7 yrs) to state co-operativesand RRBs for agricultural research purposes.

Provides long term and medium term credit (not exceeding 25 yrs) forinvestment in agriculture for co-operatives.


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Provides long term assistance in form of loans to State Govt. (notexceeding 20 yrs) for contribution to share capital of co-operative

credit institutions.

Small Industries Development Bank of India (SIDBI)

Set up as a wholly owned subsidiary of IDBI by an Act of Parliament in 1989. Principal institution whose main task was promotion and funding of small

scale institutions and co-operative organizations.

Functions

Assisting the entire spectrum of SSI sector including tiny village andcottage industries.

Refinancing term loans for co-operatives. To provide Seed Capital Scheme and National Equity Fund to promote

co-operatives.

To promote new ventures in agro processing by Venture CapitalFund.

To provides direct assistance for funding co-operatives Provides special loans for technology up gradation.

Legislation influencing co-operatives

Significance of co-operative law (functions) Based on principles and ideologies hence different from other forms of

organizations.

To ensure availability of sources of funds and capital To provide easy to understand procedures for registration To make available various services for smooth functioning To supervise the functioning of co-operatives, study financial

statements, and ensure effective utilization of resources.

To provide legal platform to sort any disputes.

Co-operative Law

Co-operative Credit Societies Act 1904 10 members forming society to make credit available to farmers or

members and thus bring improvement in agriculture. Raised fundsfrom Govt, members or non members and distribute this amt. to

members as per requirements. Liability of rural societies was

unlimited. Societies were exempted from fees and taxes payable.

Co-operative Societies Act 1912 Non Credit societies were also recognized Distribution of profits was possible


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Investment of surplus fund was possible Reserve fund need to be created Shares or interest in co-op soc. Exempted from tax. First claim to recovery of certain dues.

Maharashtra State Co-operative Societies Act 1960. (MSCS)

Co-operatives are governed either by general law or by a specific co-operative law. In Maharashtra co-operatives are run by the MSCS 1960

Objectives To give legal status to the co-operatives. To ensure that the co-operatives principles are followed. To facilitate day to day working regulation depending upon the bye-

laws.

Co Operatives Mgmt

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