A group of angry people -- men and women -- shouting abuses on the capital's street figured as the front page photograph of a local daily the other day. The caption said, they and many more not in picture are victims of fraudulence by a cooperative society which swindled their hard-earned money. Although the picture is poignant, news of similar incidents is largely ignored as these are considered too commonplace to create news value.
Cooperative societies despite their long heritage and appreciable work, under both public and private patronage, now appear to be stripped of much of the fine features they are meant to espouse and work on. The key objective of poverty alleviation through income generation among the poor and the needy is largely negated in course of the mushroom growth of the so called cooperatives all over the country, particularly in the rural areas. Known commonly as Samities, numerous groups have emerged over the past decades, whose main goal is to lure people, especially the poor, into gaining quick return for their money. These Samitis, known to many for their money-multiplying skills through investing people's money in 'highly profit generating' businesses, operate under the nose of the authorities in their apparently laudable endeavours to boost investment, even from the most unlikely of the investors.
Operation of these so called cooperative societies can be traced to the last two decades, though they came to exist making their way slowly into the country's financial arena much earlier. One of the key reasons that led these societies to flourish is the lack of supervision over their activities. Their clients, it has been found, are often too reticent about their trade with the societies unless, however, they are taken for a ride. The central bank, too, has not been empowered with sufficient powers to closely oversee and take punitive actions in case of malpractices. This has been aptly reflected in an IMF report that says, the limited powers of the central bank and lack of clarity as regards the division of responsibilities between the Bangladesh Bank and the Registrar of Cooperatives has made the former exposed to criticisms for not addressing a broad range of concerns arising out of the activities of cooperative societies. On the other hand, the authority of the Registrar has also not been sufficiently strengthened to address critical situations that call for immediate intervention.
For sometime now, there have been some efforts on the part of the government to bring a positive shift by way of enacting laws to thwart the malpractices. As a starter, the Cooperative Societies Act was amended in 2013, which among others, has brought a change in their mode of operations by barring them from using the word 'bank' to their names. However, exceptions will be allowed to societies such as registered cooperative land development bank, central cooperative land development bank, central cooperative bank, and Bangladesh Cooperative Bank. The law aimed mainly at restricting these societies from banking activities, stipulates that no cooperative society can run banking business or collect deposits from any individual or institution without prior approval of the central bank. Deposits should be kept in a particular account but the money cannot be withdrawn without joint signatures of the registrar and the concerned cooperative society.
While amending the Cooperative Society's Act is a welcome decision, implementation of the guidelines no doubt calls for effective vigilance. Strengthening the role of the Registrar should be one of the priorities that the government should look into. Following the amendment of the Cooperative Societies Act, it was expected that the organised criminality in the name of cooperatives would be curbed substantially. Unfortunately, many fake 'societies' are reportedly still in operation, especially in rural areas, where clients are least concerned about the government's laws and regulations. Thriving of the societies is made easy by their clients in the absence of effective awareness drive and enforcement measures.
Monitoring of the activities of such societies, in a strict sense of the term, is not possible because of the lack of transparency. It is said that regular monitoring of the operations of these societies is often impeded by dearth of competent manpower, non-application of available technology and so on. Also, it is alleged by experts that inactivity on the part of the designated agency is instrumental in not curbing the situation.
They suggest that preparation of a comprehensive database of all cooperative societies in the country would have been a starter to facilitate enforcement on the one hand and on the other discourage the unscrupulous activities. There are, of course, other measures followed by neighbouring countries that may be considered for replication. The authorities may also like to devise monitoring and overseeing mechanisms suitable to the country's need.