Be cautious while giving nod to co-op credit societies: Bombay High Court to Maharashtra

Concerned over the spate of cooperative credit societies going bankrupt, the Bombay high court has asked Maharashtra government to maintain care and caution while processing applications for starting new cooperative credit societies and to check their bonafides so as to prevent them from going bust over unpaid loans.

A division bench of Justices NH Patil and VL Achliya was hearing a public interest litigation filed by the Jalgaon district unit of Maharashtra Navnirman Sena (MNS) over mismanagement of credit societies across the state.

"We expect the state authorities to maintain absolute care and caution while processing applications for starting a cooperative credit society. Unless authorities are completely satisfied of the bonafides and compliance of norms they shall not grant permission," the court said last week.

Earlier, the state government informed the court that of over 1,700 cooperative credit societies in the state, 469 were declared sick. Besides, around 135 were revived, licences of 35 credit societies were cancelled and action was initiated against 104 auditors and over 2,500 officers of such societies. Also, about Rs527 crores were recovered, the state government told the high court.

On April 27, the high court directed the state government to file an affidavit stating what progress has been made in respect of the recovery of an amount of Rs487 crore from 1,633 delinquent directors and employees of credit societies.

The HC was informed that since 2013, stringent norms have been implemented for forming cooperative credit societies.

The state government has been asked to file its affidavit on June 16.