Chapter - VI. Problems of Employee s credit Co-operative societies and its remedies in Maharashtra

Transcription

1 Chapter - VI Problems of Employee s credit Co-operative societies and its remedies in Maharashtra Introduction Challenges before the co-operative movement The problems of Employees Co-operative Credit Societies Cooperative leadership Problems Role of Cooperative Micro finance in the Economic in Development Remedies of Co-operative credit societies in Maharashtra State Conclusion Regarding Co-operative credit structure and Employees Co-operative Chapter VI Problems of ECCS and its remedies in Maharashtra Page 222

2 Introduction: This chapter before discussing the regulatory machinery of the employee s credit co-operative societies, it is necessary to highlight the problems face by these societies. As has been rightly observed by Dubhashi P.R., Ex-Director, Indian Institute of public Administration, Ex- Director, Vaikunth Mehata National Institute of Co-operative management (VMNICM) pune. In purely physical terms, in them of the turnovers of business, loans given or staff employed, these are has been a vast expansion of the co-operative sector but co-operative institutions seem to have lost. Three reasons come readily to mind. First, co-operative development has become merely a part of government plans and policies. Second, co-operatives have been swallowed in the vortex of politics, and third, the intellectual and moral basis of the co-operative movement seems to have withered away. The Problems of Employees co-operative Credit Societies: Before discussing the regulatory machinery of the Employees co-operative Credit societies it is necessary to highlight the problems faced by these societies. As has been rightly observed by Dubhashi P.R., Ex-Director, Indian Institute of Public Administration, New Delhi, Ex-Director, Vaikunth Mehta National Institute of co-op. Management Pune, Secretary (Co-ordination) Cabinet Secretariat, and New Delhi. In purely physical terms, in terms of the turnover of business, loans given or staff employed, there has been a vast expansion of the cooperative sector but co-operative institutions seem to have lost, individually and collectively the clout which is necessary for the exercise of autonomy. It is necessary to go into the reasons for the loss of this clout. Three reasons come readily to mind. First, co-operative development has become merely a part of governmental plans and policies. Second, co-operative have been swallowed in the vortex of politics; and third, the intellectual and moral basis of the co-operative movement seems to have withered away. Chapter VI Problems of ECCS and its remedies in Maharashtra Page 223

3 Present Position of Supervision: Audit is, at present, being mostly carried on by the staff of the co-operative departments in the concerned states. However, in Punjab, audit of co-operative societies is with a chief Auditor assisted by adequate staff In U.P. audit of cooperative societies is the responsibility of the Chief Audit Offices who heads the Co-operative and Panchayat Audit Organization. In bigger co-operative institutions, concurrent audit system has been introduced. This is the situation regarding co-operative societies in general and the same is applicable to Employees Co-operative credit Societies. 1) Lack of co-ordination: Another point may be made about institution building. This is the need for co-operative banks and commercial banks, especially at the lower levels, to share their experience and work together in matters such as formulation of schemes, recoveries and co-ordination of activities. Such an attitude is absent to-day. 2) Political & Government Interference: Though co-operative movement is supposed to be voluntary and free from Government and political interference. Political and Government interference has become the main feature of the movement is itself endangered. It is a common experience that the Elections of co-operative organizations are postponed under one excuse or the other to suit the convenience of the ruling party. This is certainly applicable to the employees co-operative Credit Societies. Political interference in co-operatives has smiles and tears. The political intervention in cooperatives has today evolved co-operatives as instruments of political leadership and their approach to the problems of co-operatives is more political rather than social or economic cooperatives have turned to be pocket constituency of an influential family/group. 3) Dependence on Government: The inadequacy of capital and various other limitations make cooperative societies dependant on the government for support and patronage in terms of Chapter VI Problems of ECCS and its remedies in Maharashtra Page 224

4 grants, loans subsidies, etc. Due to this, the governments sometimes directly interfere in the management of the society and also audit their annual accounts. 4) Lack of Government Support: Usually the government supports these organizations in the form of training and development and conducts many programmers. But sufficient amount of subsidy or any special schemes are not designed these Women cooperatives are also treated like the general co-operatives. 5) Limited Capital: The amount of capital that a cooperative society can raise from its member is very limited because the membership is generally confined to a particular section of the society. Again due to low rate of return the members do not invest more capital. Government s assistance is often inadequate for most of the cooperative societies. 6) Problems in Management: Generally it is seen that co-operative societies do not function efficiently due to lack of managerial talent. The members or their elected Representatives are not experienced enough to manage the society. Again, because of limited capital they are not able to get the benefits of professional management. 7) Uneven Growth: A somewhat unhappy feature of the Employees Co-operative credit societies movement it its uneven geographical spread in the country. Though some historical and social factors are responsible for this, adequate corrective steps have not been taken to rectify this position by the concerned state Governments. 8) Lack of managerial Expertise: Co-operatives are mainly business and economic organizations and officers with economic and business background alone can manage co-operatives must understand the basic principles of co-operative organizations and problems of Chapter VI Problems of ECCS and its remedies in Maharashtra Page 225

5 human relationship. To appoint officers of their choice in order to have political control of these organization. 9) Lack of Professionalism: Professionalization of management is again an area where the co-operatives have failed to make any significant progress. It hardly needs to be emphasized that with the expansion and diversification of the co-operative movement, skilled management has assumed special significance and co-operative can no longer afford to ignore the importance of the techniques of modern management and they need to take all possible measures to ensure maximum business efficiency. 10) Increasing Over-dues: The most important defect about these of the Employees co-operatives credits societies is the rising amount of over-dues. These societies are not taking adequate steps to realize these over dues. Heavy over-dues at the level of the societies have impaired their capacity to borrow from the higher financing agencies. 11) Defects in Investment Policy: The investment policy of the Employees co-operatives Credit Societies has also come to be criticized in well-informed quarters. It has always been emphasized from time to time that all funds of co-operative institutions should be kept within the movement, and investment in commercial banks be reduced to the minimum possible. 12) Causes of slow progress: Despite rapid grown the overall progress of cooperative movement during 100 years of its existence is not very impressive. It is therefore necessary to know the causes of poor performance of the movement and on that basis take such steps as would promote a faster growth of cooperative in India. 13) Lack of Trained Personnel: In spite of the joint efforts of National co-operative Union and state co-operative Federation there is lack of trained personnel which is one of the important reason Chapter VI Problems of ECCS and its remedies in Maharashtra Page 226

6 for slow growth. This reason is because of lack of motivation and us satisfactory work environment. 14) Problem of Non Recovery: Many of the members who avail the loan fail to repay the installments in time because of many socio economic reasons of the family. This creates the problem of bad debt. 15) Lack of Professionalism in Management In the new era, co-operatives are going to face growing competition from Domestic and foreign companies, particularly in the agri-business sector. The Competition poses a major threat to co-operatives that are used to thriving on Government-conferred privileges including monopolistic status and huge grants and subsidies. 16) Problem of Loan recovery:- As the directors of the co-operative institution have allocated the loans to the intimate relatives, such loans have not been recovered with time. Therefore the financial conditions of such institutions have been worsened. 1 17) Government Control and Political Interference Rural co-operatives in India and other developing countries were created through enactment of laws by their governments as an instrument of purveying production inputs including credit, marketing of agricultural produce, and delivering other benefits such as subsidies and doles. Thus, instead of being Member-created, member-owned and member-controlled voluntary associations of people engaged in a business of their members common interest, cooperatives virtually became an appendage of the government. Co-operation in India predates the co-operative legislation. Indeed, it may be argued that genuine cooperation has diminished with each succeeding piece of co-operative legislation. This process began with the colonial administration which wanted to ensure that the natives did not make off with funds. To do this, they created the post of Registrar perforce an Indian Civil Service officer who did not allow the cooperatives a really autonomous status. After Independence, and particularly in the Chapter VI Problems of ECCS and its remedies in Maharashtra Page 227

7 last two decades or so, co-operative Legislation has been rewritten and amended so as to vest with government virtually total management authority and operational responsibility, leaving only accountability with the co-operatives. Consequently, today, in most states, legislation and rules govern what clearly belongs within the bye-laws of individual co-operatives. Government may, suo motto, amend the bye-laws of a Co-operative; amalgamate or divide cooperatives; hold or not hold elections; veto, annul or suspend a co-operatives decisions; appoint its own officers to manage co-operatives; and nominate, suspend or remove committees members without cause. Such laws are inimical to the essential nature of the co-operative and professional management. Reservation of managerial positions for civil servants virtually precludes professional management accountable to the members. 18) No through knowledge of Objectives: People are not well educated about the objectives, the contributions it can make in rebuilding the society and the rules and regulations of cooperation institutions. Unfortunately, no special efforts have been made in this direction. People look upon these institutions as means for obtaining facilities and concessions from the govt. so long as people expect to get something from the government, they see to it that societies some show continue to function. 19) Limited approach: The size of these societies has been very small. Most of these societies are convinced to a few members and their operations extended to only one or two villages. As a result their resources remain limited, which I make it impossible for them to expand their means and extend there are of operations and most of the societies are single purpose. Under these circumstances it has not been possible for these societies to make much progress. 20) Government Interference:- The cooperative movement in India was initial in 1904 under the auspices of British government Right from the beginning the govt. has adopted an attitude of patronizing the movement. Co-operative institutions were treated as if these were Chapter VI Problems of ECCS and its remedies in Maharashtra Page 228

8 part and parcel of the administrative set up of the government. The govt. interference thus becomes an essential element in the working of these institutions. As a result people s enthusiasm for the movement did not grow. The movement s independence and self-reliance existed only on paper and files. After attainment of independence in particular after beginning of the planning some healthy changes in the attitude of the govt. It was not given proper importance that it deserves in any plan. But even the cooperative movement has not become full-fledged people movement. Even toddy quite often co-operative societies are imposed. But the spirit of cooperation cannot flower fully in these circumstances. Neither nor did it become a people s movement. It just grew very slowly and that too haphazardly. It was a state driven institution. 21) Mismanagement and Manipulation:- The essence of the cooperative movement is that it gives the farmers the status of shareholders and assures than agricultural, educational and medical facilities under the Maharashtra state co-operatives Act, a minimum of 11 farmers is required to form a co-operative. Today the shareholder membership overages between 15,000 and 25,000 farmers. The relationship between the shareholder farmer and the co-operative is simple the farmer is committed to contributing a contributing a certain amount of cone per season and the mill is bound to take this cane. The strength of the movement was the involvement of the farmers who were shareholders in the sugar mill regardless of the size of their holdings. Over the years, this truly democratic idea got corrupted and farmers with larger holdings grew more powerful. In practice this altered the power structure of the co-operative. In the elections to the governing bodies of the sugar factories, money became such a powerful tool that the top posts of chairman and vicechairman usually went to the richest farmers even through the majority of members were formers with small or medium-sized holdings. Chapter VI Problems of ECCS and its remedies in Maharashtra Page 229

9 22) Lack of Awareness: - People are not well informed about the objectives of the movement the contributions it can make in rebuilding the society and the rules and regulations of cooperative institutions. Unfortunately, no special effects have been made in this direction. People look upon these institutions as means for obtaining facilities and concessions from the govt. so long as people expect to get something from the govt. they see to it that societies somehow continue to function. Lack of education, dirty politics of the village, caste ridden elections to the offices of cooperative societies, bureaucratic attitudes of the govt. offices at the lower rank are some of the hurdles in spreading the correct information about the cooperative movement and in educating the people about its true character and vital role in the society. 23) Restricted coverage: - The cooperative movement has also suffered on account of two important limitations on its working. One is the size of these societies has been very small. Most of these societies are confined to a few members and their operations extended to only one or two villages. As a result their resources remain limited, which I make it impossible for them to expound their means and extend there are of operations. Two, the most of the societies have not been single purpose societies, for this reason these societies are unable to take a total view of the persons seeking help, nor can they analyze and solve problems from different angle. The help these societies render thus cannot be adequate by assessing the persons and the problems only from one angle; these societies neither help properly the person nor make a optimal use of their resources. Under these circumstances it has not been possible for these societies to make much progress. 24) Functional Weakness:- The cooperative movement has suffered from inadequacy of trained personnel right from its inception. Lack of trained personnel has been caused by two major Chapter VI Problems of ECCS and its remedies in Maharashtra Page 230

10 factors. In the first place, these have been a lack of institutions for this purpose of training personnel. Secondly because of it unsatisfactory working of cooperative institutions, efficient personal din not feel attracted or motivated towards them. The functioning of the cooperative societies too suffers from several weaknesses. Some of these are taking no care of the need of credit seekers or their repaying capacity at the time of granting loans, making no adequate provision for the return of loans, unsatisfactory keeping of accounts, factional politics in it management, lack of coordination among various divisions of the cooperative structure, too much dependence on outside sources of finance, lack of adequate auditing. Such weakness has prevented them from progressing on healthy lines. Thus there are several pitfalls. Poor infrastructure, lack of quality management, overdependence on government, dormant membership, non-conduct of elections, lack of strong human resources policy, neglect of professionalism, etc. are the limiting factors. Indian cooperatives are also unable to evolve strong communication and public relations strategies which can promote the concept of cooperation among the masses. 25) Increasing Over-dues: The most important defect about these of the Employees co-operatives credits societies is the rising amount of over-dues. These societies are not taking adequate steps to realize these over dues. Heavy over-dues at the level of the societies have impaired their capacity to borrow from the higher financing agencies. 26) Defects in Investment Policy: The investment policy of the Employees co-operatives Credit Societies has also come to be criticized in well-informed quarters. It has always been emphasized from time to time that all funds of co-operative institutions should be kept within the movement, and investment in commercial banks be reduced to the minimum possible. Chapter VI Problems of ECCS and its remedies in Maharashtra Page 231

11 27) Inadequate Planning for Financing: In most of the Employees co-operative Credit Societies have neither undertaken any systematic study of the credit requirement of the members nor is any systematic planning done. The budgetary control system adopted is very unscientific and based upon personal estimates. Limitations of co-operative credit. 1. Critical Evaluation of Co-operative rural finance 2. Government control over co-operative finance in India/Maharashtra. 3. SHGS and Co-operative Banks. 4. Causes for Backwardness in Rural Areas 5. Progress after independence 6. Rural development challenges 7. Problems and constraints in the rural co-operation 8. Government interference 9. Mismanagement and manipulation 10. Luck of awareness 11. Restricted coverage 12. New directions Greater Autonomy to co-operation 13. Improvement livelihood of rural people 14. Through co-operative. Conclusions Regarding Co-operative Credit Structure and Employees Cooperative Credit Societies: The researcher has made an analytic study of the co-operative credit structure with reference to employees co-operative credit societies in general with particular reference to the societies in Maharashtra State and the conclusions of the same can be presented as follows: Chapter VI Problems of ECCS and its remedies in Maharashtra Page 232

12 1. Co-operative societies have achieved a remarkable success in many fields percent of the villages are covered by rural network of co-operative societies. As well as in urban area near about all permanent employees are the members of salary earners co-operative credit societies. 2. In real sense the origins of globalizations is depends upon the principles of co-operation. Indian cannot remain free from the global changes. We have no other choice but to be internally competitive in our production. It is now recognized chat the co-operative system in India has the capacity and potentiality to neutralize the adverse effects emerging from the process of globalization and liberalization. 3. Employee s co-operative credit society is a form of organization wherein employees and workers voluntarily associate together as human being on the basis of equality for the promotion of the economic interests of themselves. 4. Actually, co-operative administration states from the level of the Registrar, Co-operative societies, who is supreme head of the department of co-operation at state level. 5. The free market economy accepted by India in It has posed a great challenge to the existence of the co-operative societies. Now it was obligatory on the Government to free co-operative societies from the clutches of beaurocracy and political interference. To overcome the massive challenges before the country, the co-operative movement will have to play a positive and dynamic role in the 21 st century. 6. The fact is clear from the research study as co-operative credit society is concerned that owned funds are always better than borrowed funds. Chapter VI Problems of ECCS and its remedies in Maharashtra Page 233

13 Reference: 1. Dr. Ram Solankar, (2014)Arthavichar ISSN Challenges and remedies of co-operative movement in Maharashtra. Adarsh Mahavidyalaya Economic Association khand 1, Ank 1, Oct 2012 to Sep 2014 Page No The Maharashtra co-operative quarterly. Vol. 193, December, Page No Dr. S.G. Khawas, (2006),: financial analysis of Employees Co-operative credit societies in Nanded city. 4. Dr. D. R. Shinde,: A study of Urban Co-operative credit Societies in Jalna City. 5. Geetha N,:A study on perception of members on functions and performance of employee s co operative thrift and credit societies in salem. 6. Tyagi R.B. (1969): Recent trends in the co-operative movement in India, Asia Publishing House, New Delhi. Chapter VI Problems of ECCS and its remedies in Maharashtra Page 234