Coop societies illegally collecting crores, warns Punjab RCS

Devinder Pal

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Tribune News Service

Chandigarh, June 13

The Punjab Registrar of Cooperative Societies (RCS) has red-flagged a multi-crore scam involving multi state cooperative societies (MSCS) whose functionaries have illegally collected deposits worth crores from gullible investors in the state promising to double or treble their money.

They offer interest rates much higher than commercial bank rates, with hired agents luring people and the government virtually sleeping over the fraud. 

The RBI has declared such banking activities by these societies as illegal. 

On January 1, the Registrar wrote to the Union Agriculture Ministry saying these societies “may indulge in fraud”. However, other than exchanging letters, the Centre and Punjab have done little. The Registrar office says these societies did not obtain the mandatory no-objection certificate (NOC) from it. During inspections, the staff of these societies refused to provide records of deposits or any information about their managements, promoters and even functionaries.

Inspections by Assistant Registrars of Cooperative Societies have revealed that these societies are not keeping manual account/cash books and personal/general ledgers. The money is collected from investors directly and sent to head offices. The branches keep no records of such investments. RCS Arunjit Singh Miglani said that his office acted on the directions of the Department of Agriculture and Cooperative under the Ministry of Agriculture. 

Inspections were carried out and irregularities and shortcomings conveyed to the Centre. The state Cooperative Department cannot act on its own since such societies were registered with the Department of Cooperative, Central government, and only the latter was competent to take any action. 

Punjab Finance Minister Parminder Singh Dhindsa said it is obvious that whenever a company promises interest rate higher than what the commercialized banks offer, its operations always become doubtful. 

The issue is in his knowledge, “After inputs from field reports, I called a meeting of all additional deputy commissioners and aked them to discourage people from falling in the trap of these companies. I have already brought the matter to the notice of DGP.” 

The societies inspected include Adarsh Cooperative Society, Poorvanchal Multi State Cooperative Society, Sehyog Multi State Cooperative Ltd, Samridha Jeevan Multi State Cooperative Society, Empire Multi State Cooperative Society, Crown Cooperative Society and Lakshaya Multi State Cooperative Society. The department noted that The Crown Cooperative Society was likely to create

fraud with the people since it was luring people through its agents by providing very high rate of interest. The staff was reluctant to provide information about relevant records and projects in which the society is investing its capital. The aim of the society is earn profit in the name of cooperative which was against the cooperative principles. 

This is one of the largest societies in the state with offices at Amritsar, Tarsikka, Sirhind, Bathinda, Ferozepur, Mohali, Khanna, Patiala and Ropar. It does not have an NOC from the RCS. Assistant Manager, Administration, Kusum Aggarwal claimed she had an NOC but she could not provide a copy of the document. She did not respond to any of the allegations. Their branch manager, Gurdeep Singh said they were not doing anything wrong. 

In a circular to the RCS, Punjab, February 26), Manjit Singh, assistant general manager, RBI, says: “We advise that in terms of Central Registrar of Cooperative Societies, acceptance of deposits by MSCS from nominal members will be construed as acceptance of deposit from the public and carrying on banking activity. Accordingly, MSCS are not allowed to accept deposits from nominal members. We have also been informed that the government has authorized RCS of all states to conduct inspections of all MSCS. 

“We advise you to appraise us about the names and addresses of MSCS operating in your jurisdiction and whether any of these societies is accepting deposits from its nominal members as observed during inspections.” The Union government, after taking cognizance of directions of the Rajasthan HC, has sent directions to Punjab government also to conduct inspection of such companies.

What societies are doing

Crown Cooperative Society: Largest in Punjab. Head office: Delhi. Branches: Muktsar and Bathinda. Assistant manager, administration, Kusum Aggarwal claimed she had an NOC, but could not provide a copy of it. 

Adarsh Cooperative Society: Has branches in Moga, Ferozepur, Bagha Purana, Hoshiarpur, Bathinda and Barnala. Headquarters: Ahmedabad. Vollects deposits from its members under savings, RDs and FDs. Promises certain schemes making investment double, treble. No response to The Tribune’s email to the MD Secretariat. 

Poorvanchal Cooperative Society Ltd: Headquarters: Zira. Branches: Zira, Hajipur, Hoshiarpur, Barnala and Bathinda. The society operates retail stores in Punjab through which it supplies essential commodities to its members. The branches have not kept sale registers and other records. No NOC from the RCS. Society’s MD Gursewak Singh Dhllon admits the society took deposits from people. in 2012, 2013 and 2014 but as soon as he learnt that it was illegal, he stopped it. 

Sehyog Multi State Cooperative Society: Headquarters: Abohar. Branches offices: Abohar and Ferozepur. It is engaged in collecting saving account deposits and daily deposit schemes. 

RCS observed that the poor record management points towards suspicion. Its officials have not responded to several calls by The Tribune nor have they responded to emails. 

Samridha Jeevan Multi State Ltd: Head office: Maharashtra. Branches: Moga, Hoshiarpur and Bathinda. Promises very high interest rates. The RCS found no basic manual record. Punjab has not been included in the area of operations which violates the rules. 

Lakshya Cooperative Society: Record not available, but it accepts deposits from people and advances loans.