Cooperative societies oppose proposed amendment to rules

Members of cooperative societies protesting proposed changes to cooperative rules at Mudalagi in Belagavi district recently.

Members of cooperative societies protesting proposed changes to cooperative rules at Mudalagi in Belagavi district recently.  


They are upset over plans to introduce KYC norms and GST, among other things

The proposed amendments to rules governing cooperative societies have ruffled feathers of several cooperatives, triggering protests particularly in north Karnataka.

Cooperative society leaders across all parties are opposing the proposed changes. Apart from the Congress and Janata Dal (Secular) leaders, senior Bharatiya Janata Party leaders too took part in the protests.

Among other things, the protesters are upset that they will be asked to strictly implement the Know Your Customer (KYC) norms for all account holders, depositors, and loan beneficiaries; pay Goods and Services Tax (GST); and be covered under the Tax Deduction at Source (TDS). The changes propose that all transactions over ₹2 lakh will attract GST and transactions over ₹1 crore will be liable to TDS.

All this starts with the mandate that all societies will collect copies of Aadhaar card, PAN card, and other details to set up a KYC data base. This will be retrospective and details will be collected not only from new customers, but even the existing ones.

Cooperative leaders say these are not possible as most societies are not computerised and that they maintain ledgers. They also say that their depositors and loanees are farmers and rural folk who may not have documents necessary for KYC. They say that the rural poor, who work hard to save a little money or take loans for growing crops, should not be taxed at all. Taxing rural poor is a cruel method to collect money to run the administration. This will lead to destruction of the cooperative sector that is the only hope for farmers and rural poor.

“We are agitating as it is a question of existence of the cooperative sector,” said Neelakanth Kappagalguddi, director of the Karnataka State Cooperative Societies’ Association. The Union government is forcing all State governments to ensure that cooperatives adhere to these norms. The government does not seem to understand that these are counterproductive, he said. He warned of a State-wide agitation against the regulations.

‘For the better’

However, there are some who think the changes are for the betterment of the cooperative sector.

“I don’t think there is anything wrong with the regulations,” said Anup Deshpande, former Chief Executive officer of the Karnataka State Souharda Federal Cooperative, a federation of cooperatives formed under the new Souharda Cooperative Act.

A senior officer in the Department of Cooperation said cooperative societies were being made to follow rules that were mandatory for banks and micro finance institutions.

“The reason behind making KYC mandatory is to see that all financial transactions are accounted for. Societies should, in fact, welcome the changes as they will ensure that only the legitimate ones will stay in the race and others will be forced to close down. That is good for the economy,” he said.

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Printable version | Jan 21, 2020 11:12:13 AM | https://www.thehindu.com/news/national/karnataka/cooperative-societies-oppose-proposed-amendment-to-rules/article30314182.ece

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