Bhubaneswar, May 14: The recent spate of fraudulent cases related to deposit collection companies has unnerved the state government and compelled it to bring all the 1,634 self-help cooperative societies under its control. The state cabinet today took a decision to this effect.

As most of these societies are into credit-deposit business, the government will have the power to dissolve the self-help cooperative bodies if they fail to comply with its guidelines.

The self-help co-operative societies were formed after the Odisha Self-help Cooperative Societies Act, 2001, came into force.

Explaining the government move, chief secretary Bijay Patnaik said: “The existing Odisha Self-help Cooperative Act, 2001, will be replaced through an ordinance. All the existing self-help cooperatives will have to work in conformity with the Odisha Cooperative Societies Act, 1960.”

The ordinance will be promulgated soon, he said.

Sources said the rationale behind bringing a new law in the cooperative sector after a gap of 12 years had its genesis in the recent rise in crimes related to money circulation.

“The government is worried after complaints poured in from hundreds of depositors about how the Sea Shore Company, a self-help co-operative body, cheated its depositors after promising them higher incentives. Besides Sea Shore, a number of complaints are being reported from across the state about co-operative societies not returning the money to its members,” said a senior official of the co-operation department.

According to officials, of the 1,634 self- help cooperative societies, nearly 314 are into direct credit business and another 600-odd organisations have branded themselves as multi-purpose cooperative societies and continue with credit-deposit business.

Secretary, co-operation, Bishnupada Sethi said: “Henceforth, all self-help cooperative societies have to hold elections once in five years. More transparency and accountability will be brought into these organisations.”

The business transactions of these societies would be regularly audited either by a panel of independent auditors or by government auditors on a regular basis. The audit report will be submitted for government appraisal once a year.

The existing cooperatives will have to amend their laws and report to the Registrar of Co-operative Society. “The organisations which fail to do so within the next three months will be dissolved,” Sethi said.

The societies registered with the Odisha Co-Operative Societies, must have a minimum of 51 members but in the self help group cases, a society could be formed with just 10 members.

Registrar of Co-operative Societies P.K. Patnaik said: “We have no records about the volume of business self-help co-operative societies are doing. Both in government and private sector, nearly 11,000 co-operative societies are operating in the state. They have forayed into various sectors such as banking, credit, labour, housing, agriculture, printing, dairy, fisheries, timber marketing and security services.”

Swayam Shree Mahila Co-operative Society secretary Nayana Mohanty said: “Co-operatives with a good track record should not be punished. Now, even those sticking to the principle of the co-operative movement will face trouble because the existing Act will be repealed. We have 26,000 members. We have disbursed loan to the tune of Rs 13 crores and have a deposit of Rs 8 crores. Government should reconsider its decision.”

On the political plane, the Opposition Congress sharply reacted to the development.

“Government’s decision to repeal the Act is undemocratic. It will be difficult for self-help cooperatives to render services to its members,” said Congress vice-president Gurupada Nanda.