In a major crackdown, Maharashtra’s Cooperation Commissioner Krishna Lavhekar has initiated criminal action against 338 credit cooperative societies and arrested about 500 of their directors for financial irregularities.
The Cooperation Department has also recommended that the licenses of 95 auditors be cancelled for failing to blow the whistle on errant credit societies.
The action over the last two months, the first on this scale, has stunned politicians, who dominate the cooperative sector. This sector covers sugar factories, dairies and microfinance societies and forms a strong support base for the ruling Congress and Nationalist Congress Party across the state.
“We have initiated action under the Maharashtra Cooperative Act,” Lavhekar told the HT. Lavhekar said cases of criminal breach of trust, cheating and misappropriation of funds have been initiated against the directors of errant cooperative credit societies. More arrests were likely as 1807 of them had been booked.
Cooperation Department officials, who requested anonymity, said it was too early to say for sure but the financial irregularities could amount to Rs 500 crore. These include embezzlement of funds, showing false profits, and not recovering debts of relatives of directors.
The 25,000 cooperative credit societies with around 3.14 lakh investors and about 1.10 crore members have a working capital of about
{{/usCountry}}The 25,000 cooperative credit societies with around 3.14 lakh investors and about 1.10 crore members have a working capital of about
{{/usCountry}}Rs 25,000 crore. They form an integral part of Maharashtra’s economy, with their micro-finance operations providing personal loans to farmers, landless labourers, vendors and even middle-class professionals in rural and semi urban areas.
The crackdown began following widespread complaints of serious financial irregularities. Anti-corruption crusader Anna Hazare had taken up the issue, alleging that fiscal fraud committed by these cooperative societies amounted to
Rs 650 crore.
Talking to the HT, Hazare welcomed the action and insisted that a tough legal provision was needed to prevent financial fraud in cooperative societies.