Notices to 25% of financial co-op societies over no audit

Panaji: With several financial co-operative societies, which are in the business of accepting deposits and giving loans, in poor financial health, the state office of the Registrar of Co-operative Societies has started issuing show cause notices to the societies that are causing a delay in auditing their accounts.

Around 130 show cause notices have been issued in the last two-three days to urban co-operatives, primary agricultural societies and salary earners’ societies, revealed a senior source at the registrar’s office on Tuesday.

There are around 500 co-operative societies in the state that deal with shareholders’ money and are in the business of credit and lending.

Post show cause notice, if not satisfied with the replies, the office of the Registrar of Co-operative Societies is likely to take corrective action by seeking disqualification of the board members and appoint an administrator, according to a senior source.

The show cause notices have been issued to co-operative societies that have failed to audit accounts for the financial year 2018-19 viz beyond October 2019, which is the six-month grace period. 

The government is keen to know the factual financial position of the urban co-operative societies by making them conduct timely audit. Majority of the co-operative societies that deal with members’ money and are delaying auditing of their accounts are suspected to be in poor fiscal health, according to the department of co-operation.

The government is keen to improve the functioning of the co-operative societies by auditing the books of accounts. Earlier, on February 15, 2020, the government had asked all the credit co-operative societies to devise a one-time settlement (OTS) scheme for their borrowers.

The OTS scheme is meant to cut down on the mounting overdue loans (non-performing assets) advanced by the co-operative societies to their members. Thanks to the overdue loans, the co-operative societies are constrained to make provisions towards the principal amount and the interest receivable and this has been eroding the net worth of the societies.

According to senior sources in the government, almost all credit societies have overdue loans and are expected to go in for the OTS scheme.

Slowdown in economy, poor prospects in the tourism sector and closure of the mining industry in the state have affected the urban credit societies badly. Most of them are in the tight position of making provisions for overdue loan accounts with limited money to lend to members.

Of the 500 financial co-operative societies in the state, around 200 are credit societies and remaining are salary earners’ societies, VKSS, etc. The government has stopped granting licences to new credit societies. Individuals who wish to set up urban credit societies are being denied permission. Further, outside co-operative societies are not allowed to expand by opening new branches.