Urban banks, credit societies can now go private

Feb 02, 2013, 07:22 IST | Ravikiran Deshmukh

Cong-led Democratic Front (DF) government's decision to do away with Section 73 A (6) in Maharashtra State Cooperative Society Act -1960 will clear the path for cooperative societies

The state cabinet’s decision to do away with a section from the Maharashtra State Cooperative Society Act -1960, which has been deterring ministers from holding positions in cooperative societies, is likely to serve as a precursor for major positive development in the state economy.

Once section 73 A (6) is deleted from the Act, the pathway for big cooperative institutions, such as urban banks, credit societies and sugar factories, to be converted into private companies will be clear. The amendment comes into effect from February 15 along with the state government’s decision to allow ministers to hold positions in cooperative societies in the state.

The Congress-led Democratic Front government took the decision to do away with the section yesterday, in line with the provisions made in the 97th Constitutional Amendment. With the section no longer in effect, ministers will soon be claiming important positions in cash-rich urban cooperative banks, credit societies, sugar factories, spinning mills and other such institutions.

A senior state government official said on condition of anonymity that as the constitutional amendment is set to usher in discipline in cooperative societies with utmost transparency, ministers, who have been using such institutions to further their political and personal interests till date, will find it difficult to run them as cooperative units.

He added that since many of these units do not enjoy any assistance from the state government, they would be converted into private societies. The cabinet’s decision was made, keeping in mind the future of cooperative urban banks, credit societies, sugar factories and spinning mills. The cash-rich societies are often used to further political growth and also function as a vote bank, mainly due to the high number of members attached with them.

According to the senior state government official, ministers and influential leaders have always used these units to establish control over their constituencies and expand their political empire. A cooperative society has a large pool of members who are dependent on it, due to the financial investment. After such societies are converted into private units, ministers and their associates will become major shareholders. Today most of the cabinet members and ruling party legislators and members of parliament are directly and indirectly associated with such cooperative units.

When asked about the state government’s motive behind deletion of the particular section and why it was allowing ministers to hold positions in cooperative units, Minister for Cooperation, Harshwardhan Patil, said, “It is in line with the spirit of constitutional amendment. The amendment says cooperative units in which the government has no investment should be treated as autonomous. So, how long can the state bar its ministers from playing a role in such units? They should be allowed to hold positions.”

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