Regulatory Framework for Co-operatives: Duality of Control

The regulatory framework for co-operatives in India is unique in that it is characterized by duality of control. This means that co-operatives are regulated by both the central and state governments. The central government regulates co-operatives through the Banking Regulation Act (BRA), 1949, and the Multi-State Co-operative Societies Act, 2002. The state governments regulate co-operatives through their respective state cooperative societies acts.

Duality of Control

The duality of control in the regulation of co-operatives has a number of implications. On the one hand, it allows for the diversity of co-operatives to be reflected in the regulatory framework. On the other hand, it can lead to conflicts in jurisdiction and regulatory overlap.

Challenges of Duality of Control

The duality of control in the regulation of co-operatives has led to a number of challenges, including:

  • Lack of coordination between the central and state governments: The lack of coordination between the central and state governments can lead to conflicts in jurisdiction and regulatory overlap.
  • Complex regulatory environment: The complex regulatory environment can make it difficult for co-operatives to comply with all applicable regulations.
  • High cost of compliance: The high cost of compliance can be a burden for co-operatives, especially smaller ones.

Measures to Address the Challenges of Duality of Control

A number of measures have been taken to address the challenges of duality of control in the regulation of co-operatives. These measures include:

  • Establishment of the National Cooperative Development Corporation (NCDC): The NCDC was established in 1963 to promote and develop the cooperative sector in India. The NCDC plays a coordinating role between the central and state governments in the regulation of co-operatives.
  • Introduction of the Model Co-operative Societies Act: The Model Co-operative Societies Act was introduced in 2002 to provide a uniform regulatory framework for co-operatives across the country. However, not all state governments have adopted the Model Act.
  • Amendment to the Banking Regulation Act (BRA), 1949: The BRA was amended in 2020 to bring all urban and multi-state cooperative banks under the direct supervision of the RBI. This was a major reform that is expected to improve the regulation and supervision of cooperative banks.

MCQs

  1. Which of the following is NOT a characteristic of the regulatory framework for co-operatives in India?
    • (a) Duality of control
    • (b) Uniformity
    • (c) Flexibility
    • (d) Complexity
  2. Which of the following is a challenge of duality of control in the regulation of co-operatives?
    • (a) Lack of coordination between the central and state governments
    • (b) Complex regulatory environment
    • (c) High cost of compliance
    • (d) All of the above
  3. Which of the following is a measure that has been taken to address the challenges of duality of control in the regulation of co-operatives?
    • (a) Establishment of the National Cooperative Development Corporation (NCDC)
    • (b) Introduction of the Model Co-operative Societies Act
    • (c) Amendment to the Banking Regulation Act (BRA), 1949
    • (d) All of the above

Answers

  1. (b)
  2. (d)
  3. (d)

Conclusion

The duality of control in the regulation of co-operatives in India has both benefits and challenges. It is important to find a balance between the need for diversity and the need for uniformity in the regulatory framework. The measures that have been taken to address the challenges of duality of control are a step in the right direction. However, more needs to be done to streamline the regulatory environment and reduce the cost of compliance for co-operatives.