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Cooperatives in India

Types of Cooperatives in India

The cooperative model plays a significant role in India. It provides the opportunity to access agricultural credits, pool necessary resources, receive training and achieve self-confidence for the cooperative members.

The coops can be broadly classified on the basis of either their activities or organizational structure.

a. Consumers’ Co-operative Societies

b. Producers’ Co-operative Societies

c. Marketing Co-operatives

d. Housing Co-operatives

e. Co-operative Credit Societies

f. Co-operative Farming Societies

a. Consumers’ Co-operative Societies

In a consumers’ co-operative society, consumers come together and form a cooperative with an aim to buy household goods at a lower price.

The cooperative buys goods from a producer in bulk and sells it to members and non-members at a reasonable price. The capital is raised by the cooperative by issuing a low denominational share to the members. Members also receive dividends on the shares.  The one famous example of a consumer cooperative is the Apna Bazar.

b. Producers’ Co-operative Societies

In Producers’ Cooperative Societies, often small-scale producers are the members. They can be farmers, handicraft producers, artisans, herbal medicine producers, etc. The cooperative manages production and distribution of final products.

The cooperative provides raw materials and processing units to the members. Producers pool their resources, increase their production volume, and access the market. Some key examples include: farmers, dairy, fish farmers, weavers and artisans co-operatives.

c. Marketing Co-operatives

The marketing cooperative is mainly focused on farmers. The cooperative markets the produce at the best possible prices for profitability.

Additionally, the cooperative provides the bargaining strength to the farmers. They also provide facilities to grade, process, store, negotiate price, and sell the farmers’ produce. The members distribute the profits on the basis of the contribution of produce. Some examples of marketing cooperatives are Milk Co-operatives in Gujarat, Mahagrapes Coop, and Cotton Marketing Co-ops.

d. Housing Cooperatives

Housing cooperatives are societies that provide affordable housing to members. They are common in urban and semi-urban cities.

The housing cooperative constructs flats and provides them to the members. It may also provide land to its members where members then construct their own houses. The money for this is collected in instalments. One of the key examples is the National Cooperative Housing Federation of India.

e. Co-operative Credit Societies

Credit cooperative societies provide loans to members at an affordable rate of interest. They have played a significant role in protecting small farmers from the debts and exorbitant interest rates charged by local moneylenders.

Members of the cooperative regularly save money. The money collected is given as a loan to its members preferably for business, agricultural, and other income generating activities. 

Some examples are agricultural credit societies, which provide credit to farmers, and employees credit societies, focused on providing credit to employees, like: Teachers Credit Coop Society in Goa. The rules and regulations may vary across states in India. For example, check out the West Bengal’s rules and regulations for the employees credit society here.

f. Co-operative Farming Societies

The small-scale farmers can come together to form a cooperative farming society. They pool land, livestock, tools and other resources to carry out farming operations.

The farmers in the cooperative may earn a share in the total output as per their produce.  

** It is important to note that there are many other forms of enterprises that adopt the basic principles and identity of cooperatives, but may not be called cooperatives. Have you heard of the Farmer Producer Company? They are registered under the Indian Companies Act, 2013, but they abide by cooperative principles in the way it operates. 

  • Based on their organizational structure, coops in India can also be largely categorised into three types, as mentioned below.

a. Primary Cooperative:

A Primary Cooperative society is a cooperative enterprise registered and in operation locally. It has its members in the same locality. These self-help groups in India are a very good example of primary cooperative. Also, you can check out the recently created Dhundi Solar Pump Irrigators’ Cooperative Enterprise.

b. Secondary Cooperative Federation:

A Secondary Cooperative Federation is a cooperative of cooperatives at the local or state-level. One of the very famous examples is Anand Milk United Limited (AMUL).

c. Multi-State Cooperative Society:

A Multi-State Cooperative Society enterprise has its members spread across two or more states in India. You may have heard of Indian Farmers Fertilizer Cooperative (IFFCO). It is a Multi-State Cooperative Society. Some of the huge national cooperative federations, like National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), is also a Multi-State Cooperative Society.

Number of cooperatives:

According to the government's latest statistics, there are 854,355 cooperatives in India. The cooperative model is more common in rural parts of the country. The credit cooperatives are an important type of cooperatives in the country, comprising 71% of total cooperative membership in the country. 

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                          National Union Cooperative of India, 2018

Policy & Legal Framework

There are two key Cooperative Societies Acts that operate in India. One operates at the state level and the other operates across state borders when members are present in two or more states.

Details of the two Acts:

1. Cooperative Societies Act at the State Level:

Each of the states in the country have their own cooperative societies act. Broadly, theses Act provide provisions about the roles and responsibilities of cooperative societies, registration, registrar, audits, and settlement of disputes. Please note that the legal requirements, procedures, and expectations vary in different states. So, you may look at the ICA’s document for understanding on the variations across the states. Please refer to these Acts operational in Delhi, Assam, and Maharshtra as examples.

2. Cooperative Societies Act at the Multi-state Level:

The Multi State Co-operative Societies Act, 2002 is applicable to cooperative societies that have members across at least two states. This Act comes under the supervision of the central government. It provides details on the registration process, roles and functions of cooperatives, privileges, funds/properties, disputes, decision making, and penalties. For more details, you may access the Multi-State Cooperative Act.

Procedure and Requirements to form a Cooperative:

The registration process for the Cooperative Societies Act at the State level and at the Multi State Level varies. We have mentioned it separately for your reference.

1. Registration of cooperative societies at the state level:

A registrar is the key person of authority appointed in districts in a state to ensure registration, and operation of a cooperative society. Look out for the registrar’s office for legal information to form or run a cooperative.

Here we have highlighted broadly key steps to register a cooperative society. Please note that it slightly differs from one state to the other. You may have to check your registrar for exact information for your state.

  • The essential 9 steps to form and register a cooperative society are mentioned below:

Step 1:

Identify the minimum number of members required to form a cooperative. The individuals should have a common objective and aspiration to start a cooperative society. They must be above 18 years of age. The minimum number varies from 10 to 100 depending on the nature and location of cooperatives.

Step 2:

Elect a Chief promoter among the members. The person will be responsible for the mobilizing members and taking all necessary steps for the registration of a co-operative or union co-operative.

Step 3:

The members must choose a name for the cooperative. The chosen name should not show discrimination based on gender, religious consideration, caste, political ideology, or any other societal inequality.

Step 4:

Apply to the Registration Authority to reserve the name of the cooperative society. Obtain a confirmation letter for the reservation of the name. The registration authority is the registrar office most often.

Step 5:

Collect the required entrance fees and share capital from all the cooperative members. The minimum amount varies from cooperative to cooperative and from one state to the other. The requirements vary even within a state for different nature of cooperatives. Your registrar office would provide you exact information. The example of Minimum Requirements in Delhi will help you understand the variation in requirements among different types of cooperatives within a state.

Step 6:

Open a bank account in the name of the cooperative society. Deposit the entrance money and the share capital.

Step 7:

Deposit the registration fees with the Reserve Bank of India  and obtain a challan. Depending on the nature of activities of your cooperative society, the bank where you deposit your registration fees may vary. Please check with your registrar if you need to deposit the registration fees in your state bank.  

Step 8:

Submit the application for registration to the Registrar of Societies of your concerned area. Also, attach the other necessary documents with the application. Remember to collect your serial number from the Registrar.

Step 9:

The Registrar will notify the Official Gazette about the registration of the cooperative society. Next, obtain the certificate of registration from the registrar.  

It may take at least 30 days for the registration process to be completed. Do check the rules and time in your state. It may be earlier or later.

** Note: A cooperative can appeal the decision of Registrar within two months. Appeals must be done through the state government or other revenue authority authorised by the state government. If no appeal is filed within two months, the order of dissolution shall become effective.

  • Documents Required for Registering a State Level Cooperative Society:​

Prepare the following Cooperative Society Registration Documents for the cooperative registering process.

a. PAN Card:

Submit a copy of the PAN Card of all the members of the proposed cooperative society with the registration application.

b. Valid Residential Proof:

Deposit valid proof of residency for all the members. This should include their bank dtatement, driving license, Aadhaar card, utility bill and passport.

c. Memorandum of Association (MOA)

The MOA depicts and describes the objective of society’s existence and operation. It should include the following clauses:

oThe name of the society

oThe central objectives of your society for which it is established

oThe names, address, and occupation of members forming the society

oThe address of the registered office of the society

d. Articles of Association (AoA)

AoA should have the following details:

The rules and regulations to govern and maintain the day-to-day activities of the proposed cooperative society

Membership of the co-operative society

The proposed meetings

Auditors and the process of auditing

e. Forms of Arbitration (FoA)

FoA is required to show how a cooperative society will navigate in case of disputes between the society’s members and how dissolution of it will occur, if required.

f. Cover Letter 

A cover letter should clearly mention the purpose of the society. Every founding member of the society needs to sign the cover letter.

g. Address Proof

No Objection Certificate (NOC) for the registered office of your society along with an NOC from the landlord, if any.

h. List & Signatures of all the members 

The list of names of all the members and the governing body along with their signatures. In some states (example: National Capital Territory of Delhi), there could be an additional need to provide following details about the members: address, profession details, monthly income, residential proof, and a bank pass book.

i. Declaration by the society’s president.

A declaration by the society’s president must confirm his will and competency to hold the stated position.

2. Registration of the Cooperatives at Multi-State Level:

The Central Registrar is appointed by the Government of India for the purpose of registering the Multi-State cooperatives. This person is headquartered at Krishi Bhawan in Delhi. You may click for the address here. You may also check with your local registrar office for information.

The registration process follows the key steps mentioned below:

Step 1:

The multi-state level cooperatives should cater to members from at least two states. So, identify at least two states where the cooperative will serve its members.

Step 2:

Please note the following details on the minimum membership requirements for registering multi-state level cooperatives:

  • If all the members are individuals, the cooperative needs at least 50 persons from each of the states concerned.
  • If the members are cooperative societies, there is a need to have at least five cooperative societies. The 5 societies should not be registered in the same state.

Step 3:

The multi-state level cooperative should choose a name, address, areas of operation and decide on the bye laws. Check out the Model Byelaws which should act as a representative sample to form the byelaws of the cooperative.

Step 4:

Recruit members in your multi-state level cooperative as required. The members who want to be part of the cooperative should make the application to the Chief Executive of the cooperative society. The applicant should purchase the minimum number of shares and pay the value in full or in part, as stated in the bye-laws of the multi-state cooperative society.

Step 5:

The multi-state level cooperative should submit the application to the Central Registrar. Here is a Sample Application Form filled by a Multi-State Cooperative Society. If required, also consult your local registrar office.

Step 6:

The application for registration shall be answered of by the Central Registrar within a period of four months from the date of receipt by him/her. If the Central Registrar is satisfied with the application, he/she shall issue a certificate of registration signed by him. It will bear an official seal containing the registration number and date of registration of the cooperative society. The Central Registrar shall also issue, along with the certificate of registration, a certified copy of bye-laws, as approved and registered by him, which will the registered bye-laws of the concerned society. Alternatively, if the documents are missing, the Central Registrar will provide reasons and ask to submit the missing documents through a letter to the chief promoter. As an example, refer to the notice  from the registrar to a Multi-State Cooperative in Tamil Nadu.

Step 7:

The multi-state level cooperative should have its first general meeting within six months of the registration of the society by the promoter members for the election of the board of directors. The interim board selected by the applicants for the registration of a multi-state cooperative society shall hold office till the regular board is elected.

  • Documents Required to Register the Multi-State Cooperative Society:

The Department of Agriculture, Cooperation and Farmers' Welfare under the Ministry of Agriculture and Farmers' Welfare, Govt. of India has a Checklist of documents to be filled by the multi-state level cooperative for the purpose of registration.

Here we have mentioned some of the key documents required during the registration process. The requirements and process of registration may vary from time to time. Please consult the Central Registrar/local registrar office for the updated list of documents.

Some of the key documents are listed below:

  • Registration Form:

The applicants should fill and sign Form1: Registration Form . It is addressed to the Central Registrar, based out of New Delhi.

  • Registration Fees:

The registration fees varies. It may range from nil to 500 INR. Please check with your local registrar for the same.

  • Reasons to Register a Society under Multi-State Cooperative Society Act:

Provide a document justifying why it is absolutely necessary to register the cooperative society under the Multi-State Cooperative Society Act. For example, you may provide details of the objectives, operation requirements, and spread of membership beyond one state.

  • Details of the cooperative society:

Provide separate documents stating name of the proposed multi-state cooperative society, Head Quarters and address to be registered, and the objectives of the society.

  • No objection Certificate (NOC):

Obtain (NOC) from the Registrar of Cooperative Societies of the States/Union Territory where the area of operation of the society is proposed to be confined.

  • A Proof of Verification:

A certificate stating that the credentials of the Chief Promoter/Promoters have been verified by the Registrar of Co-operative Societies of the state, where the head office is proposed to be located.

  • Signatures of the members:

The application shall be signed by the applicants. The requirements vary as per the nature of membership in the cooperative. We have mentioned requirements for the different types of membership below:

(a) In the case all the members are individuals – signed by at least fifty persons from each of the state concerned

(b) In the case all the members are cooperative societies - signed by duly authorised representatives on behalf of at least five such societies that are not registered in the same state​

(c) In case all the members are another multi-state cooperative society and other cooperative societies - by duly authorised representatives of each of such societies but at least two cooperative societies shall be registered in different states

(d) In the case all the members are cooperative societies or multi-state cooperative societies and individuals - by at least (i) fifty individuals from each of the states; and (ii) one cooperative society each from two states or more or one multi-state cooperative society.

It is important to remember that no individual being a member of Multi-State Cooperative Society shall be eligible for admission as a member of a national co-operative society, federal cooperative, or other multi-state cooperative society without the permission of the Central Registrar.

  • Bye-Laws:

Four copies of the proposed Bye-laws of the multistate cooperative society duly signed by each of the persons who sign the application. Check out the Model Byelaws which should act as a representative sample to form the byelaws of the cooperative.

  • List of Members who contributed to the share capital of the cooperative:

A list of persons who have contributed to the share capital, together with the amount contributed by each of them, and the admission fee paid by them.

  • Certificate from a Bank:

A certificate from a bank (or banks) stating the credit balance in favour of the proposed multistate cooperative society.

  • A scheme of details of the work of the society:

A scheme showing the details explaining how the proposed multi-state cooperative will be beneficial for socio-economic betterment of its members. You could refer to the sample report on a tourism cooperative here.

  • Member Details for Correspondence:

A Certified copy of the resolution of the promoters which shall specify the name and address of one of the applicants for correspondence. The Central Registrar will address correspondence to him/her before registration and dispatch or hand over registration documents to him/her.

  • Member List:

Provide a list of at least 50 members from each state. It should be attached with the copies of ID proofs of the members duly attested by Chief Promoter. Please contact your local registrar to know the exact format of the member list.

  • Information about the Chief Promoter:

Provide contact number and e-mail address of the Chief Promoter or Society on the cover page, while submitting all the other documents.

*Please note that all the documents need to be submitted in original and signed by the chief promoter/promoters of the cooperative.

Key Stakeholders to Support Coop Development

  • Some key youth cooperatives in India 

1. National Yuva Cooperative Society: It is a multi-state cooperative institution. It focuses on socio economic empowerment of youth through promotion of self-help groups, entrepreneurship development, and skill development of the youth.

2. Sikkim Rural Tourism and Homestay Co-operative Society (SRT&HCS): The cooperative was formed in 2020 to promote rural tourism in the state. Look at the video here to know more.  

3. Assam Don Bosco University Cooperative : It is a cooperative store opened in 2015 to provide essential services like stationary at affordable rates to students and faculty members. Art Cooperatives in Baroda, Gujarat: It provides the struggling artists space to live, work and network. You can read more here 

4. Madras Institute of Technology Student Cooperative Store: It is university led cooperative with its membership to its students. All the departments at MIT Campus purchase the stationery and other related items from the Co-operative store.

5. Goa Youth Multipurpose Cooperative Credit Society: The coop was established in 2016. It primarily focusses on Child & Youth Development, Business & Finance.

6. MarketPlace: The organization works with artisans in Maharashtra.  They also have a few women artisan coops. Some members may be young.

7. Case studies of successful cooperative ventures in India, published during the UN International Year of Cooperatives 2012, can be accessed here  

  • Initiatives related to the Youth-based cooperatives

1. Nehru Yuva Kendra Sangthan (NYKS): NYKS is an umbrella organization for youth cooperatives in India.

2. Coop Connect by National Cooperative Union of India (NCUI) : The Coop Connect forum popularizes cooperative education to youth in schools. In the past, a number of private n schools in Delhi/NCR, Navodaya, government schools were sensitised towards cooperative values and principles, and the role of cooperatives in national economy.

3. Yuva Sahakar - Cooperative Enterprise Support and Innovation Scheme: The scheme is formulated by National Cooperative Development Corporation (NCDC). The objective is to promote entrepreneurship among youth through affordable loans for the cooperative start-ups.

4.  National Council for Cooperative Training (NCCT): The Council is promoted by Department of Agriculture and Farmer’s Welfare, Government of India. Its main objective is to organize need based training programmes for cooperatives. It also facilitates the process of human resource development for cooperatives in the country.

5.  IFFCO Yuva: It is a job portal set up by Indian Farmers Fertiliser Cooperative Limited (IFFCO)

6. Confederation of Young Leaders (CYL): It is one of the foremost chambers for youth organizations and young leaders in India working at the grass-root level.

7. Start-Up India Initiative: It is a government led initiative to promote entrepreneurship in India. It provides access to knowledge, training programs, networking opportunities to the entrepreneurs. For different states, it has different resources allocated. Check out policies and resources for your state here. Information related to some of the cooperative sectors like dairy cooperatives and self-help groups can be accessed, here.

We acknowledge the support of International Cooperative Alliance (ICA) for their inputs, and contribution to preparing the country guide. Check out the ICA website for more details on cooperatives.

Useful links