Illegal banking by coop societies raised in House

Bhubaneswar: The issue of illegal banking by some cooperative societies in the state was brought to the notice of the Odisha Assembly by two BJD members on Wednesday.

Raising the issue during Question Hour, Balasore BJD MLA Jiban Pradip Dash said the Odisha government in 2013 had abolished the Orissa Self-help Co-operative Society Act 2001 to merge it with the Odisha Cooperative Societies Acts, 1962.

“After the abolition of the Orissa Self-help Co-operative Society Act 2001, several Self-help Co-operative Societies got themselves registered with the Registrar of Cooperative Society. But these Societies never reported their activities to the Registrar of Cooperative Society. But the shocking aspect is that they are now functioning like banks across the state, especially in Balasore and Kendrapara districts, and the state government has no control over them,” Dash said.

Stating that these societies are functioning without valid banking licence like the chit fund companies, he wanted a clarification from the Cooperation minster in this regard.

In his reply, Cooperation minister Damodar Rout said after the enactment of Orissa Self-help Co-operative Society Act 2001, several inter-state cooperative societies were formed. But as these societies, resorted to chit fund business in the name banking business, it came to the notice of the government which repealed the Act later. “The CBI probe is on against those who were caught in chit fund activities,” the minister pointed out.

Stating that the origin of most of the chit fund companies is Balasore district, Rout said appropriate action would be taken if such complaints are brought to the notice of his department.

BJD member Debasis Nayak wanted to know on whether there is any rule or provision that allow cooperative societies to do banking business, and if there is any such rule, is there any credit guarantee scheme which is secured by the banking insurance like the Deposit Insurance and Credit Guarantee Corporation (DICGC)? He also sought a reply on whether the state government had allowed these cooperative societies doing the banking business, to prepare new schemes in the name of the legendary Biju Patnaik to raise money from the market.

The minister, in his reply, said as per rules, cooperative societies can receive deposits and lend loan. “If there are such schemes in the name of Biju Patnaik, I shall take all possible steps to take action against the concerned cooperative society or the concerned individual,” Rout told the House.