2

2.1 Principles of cooperatives

2.2 History of the cooperative movement in India
2.3 Constitutional framework of cooperatives in India
2.4 Indian cooperatives in the global context
2.5 Cooperative scenario in India
2.6 NABARD’s mandate of supporting rural cooperatives
2.7 NABARD initiatives in developing the cooperative sector
2.8 Way forward
Appendix to Chapter 2

Cooperatives
Tackling Challenges,
Building Opportunities
 Annual Report 2023–2­4

C
ooperatives are people-centric enterprises owned, controlled, and run by and for their members
to realise their common economic, social, and cultural needs and aspirations. Cooperatives
aggregate the power of people who, on their own, would find it difficult to achieve their goals.
Cooperatives are thus, unique entities that reduce individual risk in undertaking economic activities
through a culture of shared productivity, decision-making, and creative problem-solving.

‘Cooperation is the ideal strategy for ensuring self-sufficiency of a village; it is the well-spring of
an Aatmanirbhar Bharat.’

—Prime Minister Narendra Modi

2.1 PRINCIPLES OF COOPERATIVES

Functioning of cooperatives is driven by higher values of self-help, self-responsibility, democracy,
equality, transparency, and social responsibility (Figure 2.1). These characteristics distinguish them
from other economic models and make them best suited to play a role in strengthening the rural
economy.

Figure 2.1: Seven principles of cooperatives

De m
ocr
at i
cm
em
be
rc
on
tro
l
i ty
un
mm
r co
Concern fo

Cooperatives are 2.2 HISTORY OF THE COOPERATIVE MOVEMENT IN INDIA

unique entities that The culture of cooperation and the practice of cooperative activities are deeply ingrained in the
reduce individual
Indian ethos. It has been 120 years since cooperative institutions received legal recognition in India
risk of business
through a culture of
with the enactment of the Cooperative Credit Societies Act, 1904. The law was passed to facilitate
shared productivity, flow of institutional credit to farmers in view of the widespread distress in the agricultural sector
decision-making, in the latter part of the nineteenth century due to recurrent famines. The history of the cooperative
and creative movement since then is briefly traced in Figure 2.2 and Appendix Table A2.1.
problem-solving.

22
 Cooperatives: Tackling Challenges, Building Opportunities

Figure 2.2: Development milestones for the cooperative movement in India

Cooperative Maclagan Royal • Mehta Establishment • Establishment

Credit Societies Committee Commission on Committee of Milk of ARC
Act, 1904 Agriculture • World War II Cooperative • Establishment
of NCDC

1904 1912 1915 1919 1928 1934 1937 1942 1946 1951 1963
Cooperative Government Setting up Multi-Unit All-India Rural
Societies Act, of India Act, of the RBI Cooperative Credit Survey
1912 1919 Societies Act, Committee
1942

Establishment CRAFICARD Committee Task Force on NABARD Banking

of NDDB Committee on Model Revival of initiated project Regulation
Cooperatives Act Cooperative for CBS in (Amendment)
Credit Institutions cooperatives Act, 2020

1965 1966 1979 1982 1990 2002 2004 2011 2012 2014 2020 2021

Enhanced Establishment • Multi-State Constitution • Minimum Union

Regulatory of NABARD Cooperative (97th Capital Ministry of
Framework Societies Act, Amendment) Adequacy Cooperation
2002 Act, 2011 Norms
• National • Scheme for
Cooperative Revival of 23
Policy (2002) Unlicensed
• NCDC Act DCCBs
amended

ARC = Agricultural Refinance Corporation, CBS = Core Banking Solutions, CRAFICARD = Committee to Review Arrangements
for Institutional Credit for Agriculture and Rural Development, DCCB = District Central Cooperative Bank, NCDC = National
Cooperative Development Corporation, NDDB = National Dairy Development Board, RBI = Reserve Bank of India.

2.3 CONSTITUTIONAL FRAMEWORK OF COOPERATIVES IN INDIA

‘Cooperative societies’ is a state subject under Entry 32 of the State List of Seventh Schedule of
the Constitution of India. Cooperative societies functioning within a single state are governed by
the Cooperative Societies Act of their respective state/Union Territory (UT). Cooperative societies
functioning in more than one state/UT are governed by Multi-State Cooperative Societies Act,
2002 under the purview of Government of India (GOI). Constitution (97th Amendment) Act, 2011 Directive Principles
granted citizens the fundamental right to form cooperative societies and included a directive under of State Policy
the Directive Principles of State Policy requiring the state (government) to promote voluntary direct state
governments to
formation, autonomous functioning, democratic control, and professional management of
promote voluntary
cooperative societies.
formation,
autonomous
Cooperative banks are basically cooperative societies which are registered under the Cooperative
functioning,
Societies Act of the state concerned or under the Multi-State Cooperative Societies Act, 2002. Central
democratic control,
and state laws on cooperative societies generally deal with incorporation, regulation, and winding and professional
up of the cooperative societies. When cooperative societies carry on the business of banking, they management
come under the regulatory purview of the Reserve Bank of India, and they are licensed under the of cooperative
provisions of the Banking Regulation, Act, 1949. societies.

23
 Annual Report 2023–2­4

2.4 INDIAN COOPERATIVES IN THE GLOBAL CONTEXT

India accounts for The Indian cooperative movement is one of the largest in the world with nearly 8 lakh cooperative
nearly 27% of all societies (of the 30 lakh globally)1 and a membership base of over 29 crore people.2 India accounts
cooperatives in the for nearly 27% of all cooperatives in the world.3 Over 20% of Indian population4 is estimated to be
world. Over 20% of
part of the cooperative movement in comparison to the global average of 12%.5 Of the 300 largest
Indian population
is estimated to
cooperatives in the world (by turnover/GDP per capita), 15 are from India with IFFCO at top
be part of the position, followed by Amul.6 India ranks second in the Asia Pacific region (after Japan) and sixth
cooperative in the world (after USA, France, Germany, Brazil, and Japan) in terms of number of cooperatives
movement in under this category.7 Among the top 300 cooperatives listed by turnover (US$), IFFCO is placed
comparison to 72nd, Amul 90th, and KRIBHCO 236th.8
the global average
of 12%.
2.5 COOPERATIVE SCENARIO IN INDIA9

2.5.1 Sectoral distribution

The cooperatives in India cover a wide array of activities, including credit and banking, fertiliser,
sugar, dairy, marketing, consumer goods, handloom, handicraft, fisheries, housing, etc. Housing
(24%), dairy (17.7%), and PACS–FSS–LAMPS (13%) account for over 54% of all the cooperatives
in the country (Figure 2.3, Appendix Table A2.2).10 Also, 48% of the total cooperative members are
associated with PACS–FSS–LAMPS. Dairy cooperatives and their federations have been especially
successful in India, contributing to equitable growth of their members (Showcase 2.1).

Figure 2.3: Cooperative societies by sector (number in lakh)

Housing 1.9

1.4
Dairy

0.2 Handloom textile and

0.3 Agriculture and allied
PACS–FSS–LAMPS 1.0

Agro processing/
0.2 Women welfare
Miscellaneous
0.8

0.2 Multipurpose
0.5 Labour
0.5 Others

non-credit

0.2 Consumer
Industrial

weavers
Credit and thrift

0.3 Fishery
0.3

0.2

FSS = Farmers’ Service Society, LAMPS = Large Area Multipurpose Cooperative Society , PACS = Primary Agricultural
Credit Society.
Note: The difference between the PACS and ‘credit and thrift’ societies is that the ‘credit and thrift’ societies
are dependent primarily on member savings for meeting the credit needs of their members. The PACS were
originally thrift-oriented credit institutions but have matured into channels for disbursing credit by availing
refinance with limited emphasis on deposit mobilisation (barring a few states like Kerala).
Source: National Cooperative Database, Ministry of Cooperation, Government of India. https://cooperatives.gov.
in/en.

24
 Cooperatives: Tackling Challenges, Building Opportunities

Showcase 2.1: Dairy cooperatives—a successful endeavour

Formation of dairy cooperatives in India was the driving force behind its ‘White Revolution’,
transforming it from being a milk-deficient country to the largest milk producer in the world with
24% share in the global milk production.a The dairy sector contributes to over 5% of India’s GDP.b

Before being organised into dairy cooperatives, small-scale milk producers had little bargaining
power. The milk marketing system was controlled by contractors and middlemen. As milk is
perishable, farmers were compelled to sell their milk for whatever they were offered.

Polson, a private dairy, had monopoly over the supply of milk pasteurised in Anand (Gujarat) to
Mumbai. Acknowledging the plight of dairy farmers of Kaira in Gujarat, who were being exploited by
middlemen, Sardar Vallabhbhai Patel advised the farmers to form a cooperative society with its own
pasteurisation plant and market their milk through the cooperative society. Guided by Sardar Patel,
Morarji Desai and Tribhuvan Das Patel helped organise the farmers into primary dairy cooperatives
in villages which would, in turn, federate to form a dairy cooperative union with milk processing
facilities. This marked the beginning of the Kaira District Co-operative Milk Producers’ Union
Limited, Anand (known as Amul today). It was formally registered on 14 December 1946.

Following a visit by Prime Minister Lal Bahadur Shastri to Anand, Gujarat in 1964, the National
Dairy Development Board (NDDB) was created in 1965 with a mandate to support the creation of
dairy cooperatives along the ‘Anand Pattern’ across India. The ‘Anand Pattern’ was essentially a
cooperative structure comprising village-level dairy cooperative societies which promote district-
level unions, which, in turn, promote the state-level marketing federation. Starting in 1970, NDDB
replicated ‘Anand Pattern’ cooperatives through the Operation Flood programme all over the country.

Figure S2.1.1: Milk production in India (million tonnes)c

210

122

81
54
32
22
17 20

1951 1961 1971 1981 1991 2001 2011 2021

a
PIB (2023), ‘India ranks first in milk production in the world contributing 24% of global milk production’, Press
Information Bureau, press release by Ministry of Fisheries, Animal Husbandry & Dairying, Government of India,
7 February. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1897084. Starting in 1970,
b
PIB (2024), ‘World Milk Day (June 01)’, Press Information Bureau, press release by Ministry of Fisheries, NDDB replicated
Animal Husbandry & Dairying, Government of India, 31 May. https://pib.gov.in/PressNoteDetails. ‘Anand Pattern’
aspx?NoteId=151889&ModuleId=3. cooperatives
c
PIB (2022), ‘Milk Production in India’, Press Information Bureau, press release by Ministry of Fisheries, through the
Animal Husbandry & Dairying, Government of India, 7 September. https://pib.gov.in/FeaturesDeatils. Operation Flood
aspx?NoteId=151137.
programme all over
the country.

25
 Annual Report 2023–2­4

2.5.2 Regional distribution

Of the cooperatives Though India has a very large number of cooperatives, the spread of the cooperative movement
in India, 57% are has not been uniform across states. Maharashtra alone accounts for over a fourth of the total
in Maharashtra, cooperatives in the country. The top 5 states with the largest number of cooperatives accounting for
Gujarat, Telangana,
over 57% of the cooperatives in the country are Maharashtra, Gujarat, Telangana, Madhya Pradesh,
Madhya Pradesh,
and Karnataka.
and Karnataka (Appendix Table A2.3).

Figure 2.4: Cooperative membership as a percentage of population by state (2023)

8.4 4
6.6

24.4 4.0
11.2
13.8
18.1 7.3
5.7
16.9
13.7 7.8 12.1 13.9
12.6 7.2
25.7
5.3 12.3 4.0
23.6 15.5 9.7
15.7
18.8
7.2
45.9
37.5

100.2 18.1
49.5

33.7
31.1
76.4 35.9
122.3

123

Sources:
• No. of cooperatives and membership data sourced from National Cooperative Database 2023, Ministry of
Cooperation, Government of India. https://cooperatives.gov.in/en.
• Estimated population data sourced from Unique Identification Authority of India.

Among the big states, cooperative membership as a percentage of estimated total population is
much higher in the states in the southern and western regions than the eastern and north-eastern.
Cooperative membership as a percentage of total population was highest in Kerala (77%) followed by
Karnataka (50%), and lowest in Mizoram (4%). There are still 18,497 gram panchayats not covered
by a PACS in India and the government has launched a central plan to establish a cooperative society
in each of these.11

2.6 NABARD’S MANDATE OF SUPPORTING RURAL COOPERATIVES

Development of rural institutions is one of the core mandates of NABARD and a part of its corporate
mission statement. NABARD’s role in the development of cooperative sector can be broadly

26
 Cooperatives: Tackling Challenges, Building Opportunities

summarised under the domains of refinance support, developmental support, policy support, and
supervisory role (Figure 2.5).

Figure 2.5: NABARD’s mandate of supporting the development of rural cooperatives

Refinance support
Augmenting resources of RCBs
Facilitating capital formation in agriculture

Developmental support
Training and capacity building
Providing infrastructure support
Policy support
Supporting policy research and action at the central and federal levels
Supervision of RCBs
Conducting statutory inspections
Ensuring compliance to statutory/regulatory provisions

RCB = Rural Cooperative Bank.

• Refinance support: NABARD extends refinance to rural cooperative banks (RCBs) for
supplementing their resources for short-term and long-term lending for agriculture, allied
activities, and rural non-farm sector. Of the total ground level credit disbursed by rural credit
cooperatives, the share of resources mobilised from NABARD is over 55% (also see sections
6.2-6.5 of this report).
• Developmental support: NABARD provides developmental support through its Cooperative
Development Fund set up in FY1993 (also see Section 8.4 of this report). It also promotes
financial inclusion in rural areas through its Financial Inclusion Fund (also see Section 6.6 of
this report).
• Policy and implementation support:
◊ Centrally sponsored scheme for computerisation of the PACS (also see Section 8.3.1 of this
report)
◊ Centrally sponsored scheme for computerisation of agriculture and rural development
banks (ARDBs) (also see Section 8.3.2 of this report)
◊ Study on Reforms, Restructuring and Innovations in ARDBs: NABARD Consultancy Services
(a NABARD subsidiary) conducted this study and submitted the draft report to the Ministry
of Cooperation, GOI for consideration and feedback.
◊ National Policy on Cooperation: NABARD provided inputs for the formulation of the draft
policy to the Committee for the National Policy of Cooperation. The committee is mandated
with drafting the new National Cooperation Policy document to provide an enabling
framework to realise the vision of ‘Sahakar se Samriddhi’, strengthen the cooperative NABARD provided
movement in the country, and promote the cooperative-based economic development inputs for drafting
model. the National Policy
of Cooperation,
◊ PACS as common service centres (CSCs): A memorandum of understanding has been signed
which promotes
between Ministry of Cooperation, Ministry of Electronics and Information Technology, the cooperative-
NABARD, and CSC e-Governance Services India Limited for providing more than 300 based economic
e-services, such as banking, insurance, Aadhaar enrolment/updating, health services, development
PAN card and rail/bus/air ticket, etc., through the PACS. So far, 35,379 PACS have started model.
providing CSC services to rural citizens, which may result in higher income for these PACS.

27
 Annual Report 2023–2­4

‘Cooperation • Supervisory support: NABARD conducts periodic inspections of supervised entities

amongst including regional rural banks, and state and district central cooperative banks (statutorily)
Cooperatives’ is one and state cooperative ARDBs (voluntarily).
of the fundamental
principles of
the cooperative
2.7 NABARD INITIATIVES IN DEVELOPING THE COOPERATIVE SECTOR
movement and it
helps in achieving
synergies by 2.7.1 Cooperation amongst Cooperatives
bringing together ‘Cooperation amongst Cooperatives’ is one of the fundamental principles of the cooperative
different types movement and it helps in achieving synergies by bringing together different types of cooperative
of cooperative institutions to strengthen the movement and in increasing their share in the contribution to the
institutions to
economy. A pilot project to promote ‘Cooperation amongst Cooperatives’ was launched by the
strengthen the
movement and
Union Minister for Cooperation on NABARD Foundation Day (12 July 2023) in Banaskantha and
in increasing Panchmahal DCCBs of Gujarat to promote financial transactions of primary dairy cooperative
their share in the societies with cooperative banks and to strengthen the cooperative sector to increase its self
contribution to the reliance (also see Showcase 6.1 of this report). After the success of the pilot project, the campaign on
economy. ‘Cooperation amongst Cooperatives’ was launched in all districts of Gujarat by the Chief Minister
of Gujarat on 15 January 2024.

2.7.2 CBS upgrade in rural cooperative banks

NABARD encouraged and supported the process of bringing the RCBs onto the Core Banking
Solutions (CBS) platform.

Figure 2.6: NABARD-initiated project for CBS in cooperatives

New technologies adopted

201 RCBs BHIM UPI, PFMS, CKYCR, AePS, Green PIN,
14 187 BBPS, Positive Pay System
StCBs DCCBs
6,953 branches across
16 states and 3 UTs

AePS = Aadhar Enabled Payment System, BBPS = Bharat Bill Payment System, BHIM UPI = Bharat Interface
for Money Unified Payments Interface, CBS = Core Banking Solutions, CKYCR = Central ‘Know Your Customer’
Records Registry, DCCB = District Central Cooperative Bank, PFMS = Public Financial Management System,
RCB = Rural Cooperative Bank, StCB = State Cooperative Bank, UT = Union Territory.

NABARD, in August 2022, kicked off the ‘National Level Study on Core Banking Solutions in
Rural Cooperative Banks’. The report indicated a list of ‘Must-Have’ and ‘Good-to-Have’ modules
which NABARD has been pursuing with the CBS vendors to ensure their availability in the CBS
system. NABARD, in its endeavour to enable the RCBs to have access to latest technologies in the
banking sector, is working to facilitate common platforms for various initiatives like Centralised
Account Aggregator platform, Cyber Insurance, Common MIS Server, Centralised Payment System,
etc., for the RCBs.

28
 Cooperatives: Tackling Challenges, Building Opportunities

2.7.3 National Conference on Best Practices in Rural Cooperative Banks

A two-day ‘National Conference on Best Practices in Rural Cooperative Banks’ was organised at
Lucknow on 16–17 October 2023, attended by about 200 participants. Others watched the live
stream of the proceedings on YouTube. The workshop deliberated on the best practices of RCBs in
areas of governance, business diversification, human resource management, technology adoption
and the way forward in these areas.

2.7.4 Promoting fintech engagement of rural credit cooperatives

India is increasingly moving towards digital banking, and fintech companies are largely driving
this change. To promote the fintech engagement of the RCBs so that they may offer digitally-
enabled banking solutions to the rural populace, NABARD organised a two-day fintech workshop
for the RCBs on 11–12 March 2024 at Lucknow. The objective of the workshop was to create
awareness amongst the RCBs on fintech/agritech applications, enable an understanding of the
technology needs of the RCBs, and foster collaboration between the RCBs and fintech/agritech
companies. Also, NABARD, in collaboration with NABVENTURES, conducted a panel discussion
on the topic ‘Collaboration amongst FinTechs and RFIs’ at the Global Fintech Festival 2023 on
7 September 2023.

2.8 WAY FORWARD

The growth disparities between the rural and urban economies are a matter of concern and may
exacerbate income inequality in the country. The agriculture and allied sector comprising of
livestock, forestry, and fisheries is the bedrock of the rural economy and one of the largest providers
of rural employment.

The cooperatives provide a third alternative, with free-market organisations at the one end (which
provide goods and services through exchanges in the market) and the state-owned organisations at the
other (which provides goods and services through state control). The all-inclusive cooperative model
provides a successful and sustainable economic alternative for equitable growth in the Amrit Kaal.

While promoting the cooperative sector as the backbone of the new Indian economy, it is
important to address the present weaknesses. Lack of technology adoption has been one of the major
reasons which contributed to the decline in market share of cooperatives. The computerisation of
the PACS and ARDBs is expected to digitise the operations of grassroot-level organisations and
improve transparency and efficiency in their operations.

NABARD is working towards developing a Cooperative Governance Index (CGI) for rural
cooperative banks to assess and improve governance standards.
The all-inclusive
Members’ education and awareness of cooperative principles, management, rights, and duties cooperative
should be given due emphasis by policy planners and implementers. model provides
a successful
To build a future cadre of trained cooperators, curricula of schools and colleges, as well as and sustainable
specialised management courses should have modules devoted to the study of cooperatives. economic
alternative for
It should be the endeavour of all stakeholders to see that the RCBs increase their share in equitable growth in
agriculture credit from the current 11% to at least 20% by 2030 and 40% by FY2047. the Amrit Kaal.

29
 Annual Report 2023–2­4

NOTES
1. ICA (2023), World Cooperative Monitor (WCM) Report 2023, International Cooperative Alliance. https://
monitor.coop/sites/default/files/2024-01/wcm_2023_3101.pdf.
2. National Cooperative Database, Ministry of Cooperation, Government of India. https://cooperatives.gov.
in/en.
3. International Cooperative Alliance https://ica.coop/en/cooperatives/facts-and-figures.
4. https://uidai.gov.in/images/StateWiseAge_AadhaarSat_Rep_31032023_Projected-2023-Final.pdf.
5. International Cooperative Alliance https://ica.coop/en/cooperatives/facts-and-figures.
6. IFFCO = Indian Farmers Fertiliser Cooperative Limited, Amul = Gujarat Cooperative Milk Marketing
Federation Ltd.
7. ICA (2023), Note 1.
8. KRIBHCO = Krishak Bharati Cooperative.
9. Unless mentioned otherwise, all data quoted in this section is sourced from the National Cooperative
Database 2023, Ministry of Cooperation, Government of India. https://cooperatives.gov.in/en.
10. PACS = Primary Agricultural Credit Society, FSS = Farmers’ Service Society, LAMPS = Large Area
Multipurpose Cooperative Society.
11. PIB (2023), Functioning of PACS, Press Information Bureau, press release by Ministry of
Cooperation, Government of India, 12 December. https://pib.gov.in/PressReleaseIframePage.
aspx?PRID=1985494#:~:text=New%20Multipurpose%20PACS%2F%20Dairy%2F%20
Fishery,NCDC%20and%20other%20National%20level.

30
 APPENDIX TO CHAPTER 2

Table A2.1: Development milestones for the cooperative movement in India

Year Development milestone

1904 Cooperative Credit Societies Act, 1904

• Legal basis for credit cooperatives
• Office of Registrar for cooperative development
• Restricted to credit cooperatives

1912 Cooperative Societies Act, 1912

• Formation of non-credit societies for weavers, artisans, marketing, etc.
• Federation of cooperatives
• Formation of CCBs/DCCBs

1915 Maclagan Committee

• ‘There should be one cooperative for every village and every village should be covered by a
cooperative.’
• Advocated for a 3-tier cooperative credit structure with primary societies at the village level,
CCBs at the intermediary level, and the Provincial Cooperative Bank at the apex.
• Recommended the establishment of LMBs (now ARDBs).

1919 Government of India Act, 1919

• Cooperation transferred from federal to provincial subject.

1928 Royal Commission on Agriculture

• Endorsed resolution of the Registrar’s Conference (1926) favouring the establishment of LMBs for
long-term credit to agriculture.
• State should patronise cooperatives and protect the sector.

1935 Setting up of the RBI

• RBI Act, 1935 required RBI to set up an Agricultural Credit Department.

1937 • Mehta Committee recommended the reorganisation of cooperative credit societies as

multipurpose cooperatives.
• Later, World War II gave momentum to the growth of multipurpose cooperatives as
procurement and rationing of commodities was done through cooperatives to counter inflation
and shortages.

1942 Multi-Unit Cooperative Societies Act, 1942 to regulate cooperatives in more than one state

1946 Establishment of Milk Cooperative

To free dairy farmers from exploitation by intermediaries in Gujarat, the Kaira District Cooperative
Milk Producers’ Union Limited, now known as Amul, was formed on 14 December 1946 (also see
Showcase 2.1).

1951 Recommendations of the All India Rural Credit Survey Committee led to the RBI playing a greater
role in coordinating and overseeing the credit activities of cooperatives through
• LT loans to state governments to subscribe to the share capital of cooperatives,
• loans to LMBs, and
• establishment of NRC (LTO) Fund and NRC (Stabilisation) Fund.

31
 Annual Report 2023–2­4

Year Development milestone

1963 • Establishment of the Agricultural Refinance Corporation, renamed Agriculture Refinance

and Development Corporation, for providing refinance/direct loans/subscriptions to fully
guaranteed debentures of central LMBs, StCBs, scheduled commercial banks (shareholders of
the cooperatives), and cooperative societies.
• Establishment of NCDC to promote production, processing, marketing, storage, export and
import of agricultural produce, food products, livestock etc., on cooperative principles.

1965 • Establishment of NDDB to replicate Anand model of integrated cooperative structure of dairy
farmers across India, which later led to Operation Flood.

1966 Enhanced Regulatory Framework

• Selective provisions of the RBI Act, 1934 and later, Banking Regulation Act, 1949 were made
applicable to cooperative banks with effect from 1 March 1966, to regulate their banking
business and facilitate insurance coverage of deposits. Thus, they became an integral part of
the country’s banking system.

1979 CRAFICARD Committee

• Recommended the establishment of NABARD
• 2-tier structure in smaller states and 3-tier structure in larger ones
• PACS to provide all types of credit and function as agents of LDBs
• PACS to mobilise deposits

1982 Establishment of NABARD

• NABARD came into existence on 12 July 1982 by transferring RBI’s agricultural credit functions
and refinance functions of the (then) ARDC. NRC (LTO) Fund and NRC (Stabilisation) Funds with
the RBI were taken over by NABARD.

1990 Committee on Model Cooperatives Act

• Chaired by Choudhary Brahm Prakash, the Committee emphasised the need to make
cooperatives self-reliant, autonomous, and fully democratic institutions.
• It proposed a model law to dilute the interference of state governments in their functioning.
• A few states created a parallel cooperative legislation and passed the Mutually Aided
Cooperative Societies Act to govern and regulate self-reliant/mutually aided cooperatives
which have not received any assistance from the government.

2002 • Multi-State Cooperative Societies Act, 2002 enacted to regulate multi-state cooperatives in
the spirit of the recommendations of Model Cooperatives Act.
• National Cooperative Policy, 2002 formulated to facilitate the all-round development of
cooperatives.
• NCDC Act amended to enable direct funding of cooperatives against suitable security.

2004 Task Force on Revival of Cooperative Credit Institutions

• It made recommendations for reviving rural cooperative credit institutions, while providing
legal/institutional measures necessary for facilitating this process.
• Based on these recommendations, a financial package with an outlay of ₹13,596 crore was
announced in January 2006, of which GOl’s share was ₹9,245 crore. The package was closed on
30 June 2011.
• The package aimed at wiping losses accumulated from agricultural credit and non-credit
businesses as on 31 March 2004 and raising CRAR to 7%.

2011 Constitution (97th Amendment) Act, 2011

• Fundamental Right to form Cooperatives: Article 19 (1)(c) of the Indian Constitution was
amended to make formation of cooperative societies a fundamental right for citizens.
• Directive to Promote Cooperatives: New Article 43B was added in the Directive Principles of
State Policy directing the state (government) to promote voluntary formation, autonomous
functioning, democratic control, and professional management of cooperative societies.

2012 NABARD initiated project for CBS in cooperatives

• NABARD supported the process of bringing all cooperative banks onto the CBS platform.
• 201 RCBs (14 StCBs and 187 DCCBs) from 16 states and 3 UTs were facilitated in joining the CBS.

32
 Cooperatives: Tackling Challenges, Building Opportunities

Year Development milestone

2014 • Minimum Capital Adequacy Norms made applicable for StCBs and DCCBs by the RBI—StCBs
and DCCBs to achieve CRAR of 7% by 31 March 2015 and 9% by 31 March 2017.
• Scheme for Revival of 23 Unlicensed DCCBs with financial assistance of ₹2,375.4 crore (GOI
share of ₹673.3 crore) in 4 states (16 in UP, 3 in Maharashtra, 3 in J&K, and 1 in West Bengal) that
did not meet the licensing requirement.

2020 Banking Regulation (Amendment) Act, 2020

• The amended provisions of the Banking Regulation (Amendment) Act, 2020 were made
applicable to StCBs and DCCBs from 1 April 2021.
• The amendments seek to protect the interests of depositors and strengthen cooperative banks
by improving governance and oversight of the RBI, while enabling better access to capital for
these banks.

2021 Union Ministry of Cooperation

• A separate Ministry of Cooperation was established on 6 July 2021 with the vision of achieving
‘Sahkar Se Samriddhi’ (Cooperation for Prosperity).
• Since its inception, over 54 major initiatives have been taken for the holistic development of the
cooperative sector.

ARC = Agricultural Refinance Corporation, ARDB = Agriculture and Rural Development Bank, CBS = Core Banking Solutions,
CCB = Central Cooperative Bank, CRAFICARD = Committee to Review Arrangements for Institutional Credit for Agriculture and
Rural Development, CRAR = Capital to Risk (Weighted) Assets Ratio, DCCB = District Central Cooperative Bank, GOI = Government
of India, J&K = Jammu and Kashmir, LDB = Land Development Banks, LMB = Land Mortgage Bank, LT = Long Term, NRC (LTO)
Fund = National Rural Credit (Long-Term Operations) Fund, NCDC = National Cooperative Development Corporation,
NDDB = National Dairy Development Board, PACS = Primary Agricultural Credit Societies, RBI = Reserve Bank of India, RCB = Rural
Cooperative Bank, StCB = State Cooperative Bank, UP = Uttar Pradesh, UT = Union Territory.

Table A2.2: Cooperative society membership by sector (2023)

Category No. of No. of Members per Societies (%) Members (%)

societies members society (no.) by sector by sector
(lakh) (lakh)

Housing 1.92 147 76 24 5

Dairy 1.42 157 111 18 5

PACS–FSS–LAMPS 1.04 1,399 1,342 13 48

Credit and thrift 0.80 433 541 10 15

Labour 0.45 15 33 6 1

Miscellaneous non-credit 0.30 25 83 4 1

Agriculture and allied 0.27 98 365 3 3

Fishery 0.26 47 182 3 2

Women’s welfare 0.24 54 223 3 2

Agro-processing/industrial 0.23 25 111 3 1

Consumer 0.21 64 303 3 2

Multipurpose 0.20 26 129 2 1

Handloom weavers 0.20 52 263 2 2

Others 0.47 371 786 6 13

Total 8.00 2,913 364 100 100

FSS = Farmers’ Service Society, LAMPS = Large Area Multipurpose Cooperative Society, PACS = Primary Agricultural Credit Society.
Note: The difference between the PACS and ‘credit and thrift’ societies is that the ‘credit and thrift’ societies are dependent
primarily on member savings for meeting the credit needs of their members. The PACS were originally thrift-oriented credit
institutions but have matured into channels for disbursing credit by availing refinance with limited emphasis on deposit
mobilisation (barring a few states like Kerala).
Source: National Cooperative Database, Ministry of Cooperation, Government of India. https://cooperatives.gov.in/en.

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 Annual Report 2023–2­4

Table A2.3: Cooperative society membership by state (2023)

Cooperative members
State/UT No. of cooperatives Aggregate members as percentage of total
estimated population

Andaman & Nicobar Islands 2,215 144,584 35.9

Andhra Pradesh 17,803 9,597,143 18.1
Arunachal Pradesh 1,197 89,545 5.7
Assam 11,148 4,318,231 12.1
Bihar 26,640 15,998,540 12.6
Chandigarh 476 49,721 4.0
Chhattisgarh 9,171 4,731,974 15.7
Delhi 5,943 1,569,276 7.3
Goa 5,439 1,578,643 100.2
Gujarat 81,432 16,873,870 23.6
Haryana 32,466 5,464,638 18.1
Himachal Pradesh 5,140 1,825,892 24.4
Jammu & Kashmir 8,778 896,054 6.6
Jharkhand 11,455 2,093,817 5.3
Karnataka 44,854 33,501,183 49.5
Kerala 6,103 27,325,326 76.4
Ladakh 260 25,197 8.4
Lakshadweep 35 84,393 122.3
Madhya Pradesh 51,787 13,443,329 15.5
Maharashtra 222,069 57,973,552 45.9
Manipur 11,256 829,340 25.7
Meghalaya 2,656 240,205 7.2
Mizoram 1,229 49,466 4.0
Nagaland 8,118 310,933 13.9
Odisha 7,578 8,709,507 18.8
Puducherry 458 463,802 33.7
Punjab 19,061 3,434,928 11.2
Rajasthan 35,942 11,075,332 13.7
Sikkim 3,793 116,193 16.9
Tamil Nadu 21,833 23,934,636 31.1
Telangana 60,112 14,300,725 37.5
Dadra & Nagar Haveli 530 46,633 7.2
and Daman & Diu
Tripura 3,142 511,559 12.3
Uttar Pradesh 43,558 18,478,449 7.8
Uttarakhand 5,318 1,601,973 13.8
West Bengal 31,208 9,591,686 9.7
Total 800,203 291,280,275 21.0
Note: Data on aggregate members may include membership of an individual in multiple societies.
Source:
• No. of cooperatives and membership data sourced from National Cooperative Database 2023, Ministry of Cooperation,
Government of India. https://cooperatives.gov.in/en.
• Estimated population data sourced from Unique Identification Authority of India.

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