Section 63B of The Multi-State Co-operative Societies Act, 2002
1[63B. Rehabilitation and reconstruction of sick societies.-- (1) If, at any time, the Central Registrar, is of the opinion that a multi-State co-operative society has become sick, he may, by an order, declare such society as sick co-operative society.
- (2)Where a multi-State co-operative society is declared as a sick co-operative society under sub-section (1), the Central Government or any person or agency authorised by it, may prepare a scheme for rehabilitation and reconstruction of the society and hand it over to the society for approval of the general body.
- (3)The Central Government may, on the recommendation of the general body and to give effect to the scheme for rehabilitation and reconstruction referred to in sub-section (2), re-organise the board of such society with such persons, having experience in the field of co-operation, management, finance, accountancy and any other area relating to such societies as may be recommended by the general body: Provided that in respect of a sick multi-State co-operative bank, any scheme for rehabilitation or reconstruction shall be done with the prior approval of the Reserve Bank. Explanation.-- For the purposes of this section, the expression "sick co-operative society" means a multi-State co-operative society being a society registered under the provisions of this Act which has at the end of any financial year accumulated losses equal to or exceeding total of its paid-up capital, free reserves and surpluses and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year.]
Summary
- The Central Registrar has the power to declare a multi-state co-operative society as sick if it meets specific financial distress criteria.
- A sick co-operative society is one that has accumulated losses equal to or exceeding its paid-up capital, free reserves, and surpluses, and has suffered cash losses for two consecutive financial years.
- Once a society is declared sick, the Central Government or an authorized person can prepare a rescue plan, called a rehabilitation and reconstruction scheme, which must be approved by the society's general body.
- The Central Government can re-organize the board of directors of a sick society using experienced professionals recommended by the general body.
- Any recovery or rescue scheme for a sick multi-state co-operative bank requires the prior approval of the Reserve Bank of India.
Practical examples
FAQ
1. What qualifies a society as a sick co-operative society under Section 63B of the Multi-State Co-operative Societies Act, 2002?
Under Section 63B of the Multi-State Co-operative Societies Act, 2002, a sick society is one with accumulated losses equal to or exceeding its paid-up capital, free reserves, and surpluses, which has also suffered cash losses in that financial year and the one immediately preceding it.
2. Who has the authority to declare a society sick under Section 63B of the Multi-State Co-operative Societies Act, 2002?
The Central Registrar has the sole authority to declare a multi-state co-operative society sick by official order under Section 63B of the Multi-State Co-operative Societies Act, 2002 when of the opinion that it has met the sickness criteria.
3. Can the board of a sick society be reorganized under Section 63B of the Multi-State Co-operative Societies Act, 2002?
Yes, under Section 63B of the Multi-State Co-operative Societies Act, 2002, the Central Government can reorganize the board of directors with experienced professionals on the recommendation and approval of the general body of the society.
4. Is there any special requirement for sick banks under Section 63B of the Multi-State Co-operative Societies Act, 2002?
Yes, Section 63B of the Multi-State Co-operative Societies Act, 2002 requires that any scheme for the rehabilitation or reconstruction of a sick multi-state co-operative bank must get prior approval from the Reserve Bank of India.
Test yourself
Q1.Under Section 63B of the Multi-State Co-operative Societies Act, 2002, what financial condition must be met for a society to be defined as a sick co-operative society?
Q2.Under Section 63B of the Multi-State Co-operative Societies Act, 2002, who has the power to declare a multi-state co-operative society as sick?
Q3.Under Section 63B of the Multi-State Co-operative Societies Act, 2002, whose approval is required before a rehabilitation and reconstruction scheme can be executed for a multi-state co-operative bank?
Q4.Under Section 63B of the Multi-State Co-operative Societies Act, 2002, who must approve the rehabilitation scheme prepared by the Central Government before the board can be reorganized?