MANAGEMENT OF CO-OPERATIVES1

MANAGEMENT
OF
CO-OPERATIVES
 MANAGEMENT OF CO-OPERATIVES2

Introduction
Roti, kapda aur makan, these are the three main pillars of
human life. A human being strives and works hard to
satisfy these basic needs. While food and clothing play a
significant role, shelter that is a house is a very crucial
need in the life of human beings. In today’s world go
congestion and competition, getting a decent place to live
and to survive is a very difficult task.
Today, there is such an acute shortage of land and
housing that people are forced to compromise with
anything. Considering the huge demand, builders and
landowners started exploiting the people in the name of
housing. Thus, the need for housing co-operatives grew.
Co-operatives housing societies are today very popular
among the people. They play a significant role in solving
the housing problem and prevent the exploitation of the
landlords. Housing societies provide for systematic and
organized way of maintaining, and functioning of the
building and property. It is a move with a united effort
towards solving the problems of day to day life such as
water, electricity, hygiene, maintenance and repairs etc.
 MANAGEMENT OF CO-OPERATIVES3

History
Co-operatives in India were introduced by
the British primarily to aid small-scale farmers
and to improve access to rural credit. The first
Co-operative Societies Act was adopted in
1904, which then only included credit co-
operatives. The act was soon amended to grant
the registration at the State level of non-credit
co-operatives, including housing and its
administration, allowing them to adapt the
legislation to prioritize local needs, in the years
1912 and 1919 respectively.

In tandem with cooperative societies, the

co-operative housing movement started to
Develop at the beginning of the 20th century.
Bangalore Building Co-operative Society, The
first housing co-operative in India, was founded
in 1909 in the State of Karnataka (Former State
of Mysore). In 1913, the State of Maharashtra
(former State of Bombay) set up a non-official
body, the Bombay Co-operative Housing
Association, which did a Pioneering job in
 MANAGEMENT OF CO-OPERATIVES4

propagating co-operative housing. Among many

milestones, the
Association elaborated model by-laws which
were used in the organisation of several
Housing co-operatives. It was also the first one
to get the financial participation of the State in
the affairs of the housing co-operatives.

Meaning/Definition:
According to the Maharashtra Co-op Societies Act,
1960, a housing society is defined as, “a society, the
object of which is to provide its members with open
plots for housing, dwelling houses or flats; or if with
open plots , dwelling houses or flats are readily
acquired to provide its members common amenities
and services.”
Co-ops are more commonly known as "flats" in India.
This type of housing is very common in big cities, but
not very popular in rural India. Actually, they are
registered as "co-operative housing society” in that
the owners actually have a share of the co-op and
not the actual real estate itself. Owners can sell the
 MANAGEMENT OF CO-OPERATIVES5

"share" in the open market, but they have to get the

approval of the co-op to complete the transaction.

Objectives:
The Co-operative Housing Society is the society
formed by people who have regular source of
income and come together for the purpose of
building houses.
The objectives of the societies are as under:
1.To provide shelter at minimum cost.
2.To arrange for shelter of the members.
3.To encourage for living social life.
4.To inculcate the habit of regular savings.

Types:
1. Tenant Ownership Society :
It is the housing society where the land, on which
the houses/flats are built and constructed is
secured either on leasehold or freehold and held
by the society for the joint activities of the
members, however, the houses/flats, constructed
 MANAGEMENT OF CO-OPERATIVES6

on such land, are owned by its individual

members lease holders. The lease contains
prohibiting subletting, transfer, etc.
2. Tenant Co-operative Housing Societies :
It is the society that holds both the
land as well as the building, either on leasehold
or freehold basis and allots them to its members
who purchase its share and then may pay rent
for the place, allotted to them but the society.
3. Builders Societies :
To built the houses and earn profit is the
main objective of these societies. They
themselves handle the work of selecting the site,
plans and construction under personal
supervision. After the houses are constructed
they are sold. The people who desire to
purchase the houses can become members of
society. The society helps the members for
obtaining loses.

4. Flat Ownership Co-operatives :

Such societies are formed and
registered under the flat ownership act. Due to
 MANAGEMENT OF CO-OPERATIVES7

the society of land for constructional works, the

housing societies have adopted the system of
constructing flats. At certain cost these flats are
sold to the members. These societies can obtain
loans easily. All the flats holders have joint
ownership on the land.
5. Housing Credit Societies :
This Society arranges for houses
for its members. It also makes arrangements of
loans for building houses. The members can
build the houses as per their needs and
requirements.
 MANAGEMENT OF CO-OPERATIVES8

DISTRICT LEVEL HOUSING

FEDERATION
The district level federation is a body that
supervises and regulates the functioning of the
primary co-operatives. all the primary co-
operatives have to compulsorily register as a
member with the district level federation the
district level federation provides the primary co-
operatives with assistance with regards to
registration. Legal procedures and management
of the society, thus, taking care of its effective
functioning.
OBJECTIVES:
1. To the cooperative housing societies in
getting approval to the plans from town
planning department and completion
certificate from the municipal authorities
2. To give legal and technical guidance to
the member societies
 MANAGEMENT OF CO-OPERATIVES9

3. To help the proposed cooperative

housing societies to obtain registration
4. To guide the members in administration
and management of their societies

STATE LEVEL HOUSING

FEDERATION
These are located in each and every state, and
fuction in co ordination with the district leave
federation and primary level co-operative
socites. The provide various facilities to the
primary socites in the form of financial
assistance, legal and technical guidance,
information regarding building material etc.
OBJECTIVES
1. To help the primary housing societies in
getting loans
 MANAGEMENT OF CO-OPERATIVES10

2. To guide the primary cooperative

housing societies regarding legal,technical
and management problems.
3. To advance loans to small housing
complexes.
4. To undertake publicity and propaganda
regarding organization of co-operative
housing societies.
5. To co-ordinate activites of primary
housing societies and district level co-
operative federation.
6. To help the housing societies in getting
better building material at reasonable rates.
7. To help proposed co-operative housing
societies in getting land.

NATIONAL CO-OPERATIVE HOUSING

FEDERATION:
 MANAGEMENT OF CO-OPERATIVES11

The national co-operatives housing societies

federation was founded in the year 1969. The
head office being located at New Delhi. Its
members include the village/city level and
district level federations, the state level
institutions and financing hosing societies.
Conducting research and development in
construction methods and distributing the same,
encouraging the co-operative movement and
providing better finance facilities are a few
among many of its functions.
Objectives
1. To establish financing institution at the
state level for helping the primary co-
operative housing societies in getting loans
at lower rate of interest.
2. To give technical and legal guidance to
member federation.
3. To undertake research and development
work for reduction in the construction cost
and give publicity to the result.
 MANAGEMENT OF CO-OPERATIVES12

4. To give publicity and propaganda of co-

operative housing movement by publishing
books, brouchers etc.
5. To explain various financial schemes to
the co-operative housing societies ad their
members.

MANAGEMENT
Every co-operative society has to convene the first general
meeting within 3 months from the date of receipt of the
registration certificate.
Functions of First General Meeting:
1) Appointment of provisional managing committee for
one year.
2) Election of chairman and vice chairman.
3) Consideration of staff and fixing their remuneration.
4) Approval of accounts.
5) Action plan for the first year of working.
Functions of Annual General Meeting:
 MANAGEMENT OF CO-OPERATIVES13

1) Confirmation of the minutes of previous meeting.

2) Approval of statements of accounts, audit report,
annual budget, action plan and admission of new
members.
3) Amendment to byelaws.
4) Appointment of certified auditors.
5) Appointment of internal auditor and fixing his
remuneration.
6) Election of managing committee.
7) Appropriation of profit.
8) Any other matter with permission of the president.

Functions of the Managing

Committee:
1) Admission to membership.
2) Transfer of shares.
3) Supervision over staff.
4) Investment of surplus fund.
 MANAGEMENT OF CO-OPERATIVES14

5) Appointment of sub-committee – if necessary.

6) Prepare draft of amendment to and bye-laws.
7) To raise funds for the working of the society.
8) To supply information to Government, Co-
operative Department, Financing Institution etc.
9) Preparation of annual budget and annual
statement of accounts.
10) To arrange for election of next committee well in
time.

HOUSING FINANCE:
Following initiatives have been taken as a part of
implementation of National Housing and Habitat
policy:
1) An action plan has been drawn up to achieve the
target of shelter for all enunciated in the
b\national agenda for governance. Construction
 MANAGEMENT OF CO-OPERATIVES15

of seven lakh additional dwelling units in urban

areas will be facilitated by the government by
providing fiscal and technological support. It will
require all – round involvement
Of private sector/co–operatives and
NGO’s/CBO’s (Community Based
Organisations).
2) National housing bank setup in 1988 as a subsidiary
of RBI, isfunctioning under the administrative control
of banking division of department of economic
affairs. It is supervising and controlling various
housing finance institutions (HFI’s), so far it has
recognized 29 HFI’s.

3) As an action plan item, night shelter scheme for

footpath dwellers is being implemented as a
centrally sponsored scheme in the metropolitan and
other major urban centers. Since April 1991, 101
schemes benefiting over 4 lacs footpath dwellers
have been sanctioned by HUDCO in various parts of
the country.

4) Allocation by Life Insurance Corporation/General

Insurance Corporation for direct and indirect
finance for housing has been increased.
 MANAGEMENT OF CO-OPERATIVES16

PROBLEM’S OF HOUSING CO-

OPERATIVES
1. Inadequate finances: In some states there is no
apex organization and the LIC’S assistance is
quite inadequate.
2. Scarcity of land: There are many hindrances in
getting the land after formation of society. The
government is also neutral on this aspect. The
prices of land is high.
3. Difficulties in getting building materials: There is
no regular supply of building materials and prices
of the materials are always going up.
4. Difficulties in personnel: There is difficulties in
getting expert workers and unskilled labour.
There is also laxity in honesty and punctuality of
the workers working in housing societies.
5. Public not interested: There is disinterest in the
minds of people about co-operative housing
societies. The middle class is neutral because of
 MANAGEMENT OF CO-OPERATIVES17

the finanacial stress. They have to face many

difficulties while availing loans.
6. Malpractices: Many contractors and agents have
succeeded in obtaining black money and have
constructed their own flats in posh areas.

REMEDIAL MEASURES
1. Supplying materials on priority basis: The
building material should be provided on priority
basis. There should be quota of this material to
apex co-operative housing society. The registrar
of the society should have control on the quota
allotted to co-operative housing society.
2. Allocate land on priority basis: Government
should give preference to co-operative housing
societies while allocating land so as to start the
work by the societies or otherwise whose
existence is only on paper.
 MANAGEMENT OF CO-OPERATIVES18

3. Bye-laws: There are no systematic bye-laws of

co-operative housing societies in the country. All
co-operative housing societies should adopt
model bye-laws suggested by the committee
appointed under the president-ship of S.T.Raja.
Thereby the registrar of societies can have
control over the working of their societies.
4. Financial assistance: Agencies like LIC,HUDCO
etc. should provide housing loans at
concessional rates. Government should
establish central housing finance institute to
provide finance to apex housing societies.
5. Tax concessions: The houses build by co-
operative housing societies should get
concession in taxes and certain incentives
should be given.
6. Membership to houseless people: The
membership of the housing society should be
given only to the people who have no house.
 MANAGEMENT OF CO-OPERATIVES19

Co-operative Housing In Rural

Areas:
Problem of housing in rural areas is acute one.
There was a shortage of houses in rural areas. It is
therefore that the ministry of housing emphasized on
setting up houses in rural areas.

Other measures include:

1.Loans be given through rural housing co-
operative.
2.Block development officers should assist such
rural schemes in legal matters.
3.Community development authorities should
inform and intensify their efforts through
schools and other centres.

Suggestions:
The following are the measures suggested by the
working group:
1.LIC should meet all requirements of apex bodies
to get them adequate finances and cover risks of
members coming under group schemes.
 MANAGEMENT OF CO-OPERATIVES20

2.HUDCO should be asked to liberalise the

conditions of disbursement finances.
3.Defaulters should be reduced and laws should
be suitably amended in this respect.
th
4. The 9 co-operative congress suggested that

housing co-op should be exempted from paying

stamp duty, registration charges, etc.
5.The said congress also emphasized on evolving
national housing policy (long term) for India.
6.To avoid delay in disposals, special tribunals be
set up arming them with powers of civil courts to
finalize civil suits.
7.In five years plan itself, separate funds he
allocated to such co-operatives.

Conclusion
Housing co-operatives have been a very successful
strategy in solving the housing problems of the
people especially in a country like India, where
population is increasing at a very rapid pace but the
land to accommodate them is depleting. In cities like
Mumbai, where housing is a major problem and
people are being exploited at the hands of the
landlords and middlemen, housing co-operatives are
the right solution to eradicate these problems.
 MANAGEMENT OF CO-OPERATIVES21

However, housing socities have their own problems

such as legal proceedings against landlords,
tenants, maintenance of the building, lack of
adequate knowledge and professional management
which has limited the success of this sector in co-
operatives

CASE STUDY
Navin Co-op. Housing Society consisted of 76
members. It was formed in the year 2002. For the
last three years, the promoters managing committee
is continuing and no elections are held. In the AGM,
the accounts have not been presented. The
secretary is charging penal interest from the
defaulting members and the amount is being
compounded annually. Also, they are charging
double the maintenance charges from those
members who have leased out their flats. In case of
 MANAGEMENT OF CO-OPERATIVES22

one of the large defaulting member, the Society has

disconnected the water supply and therefore he had
lodged a complaint in the registrar, and the Registrar
has appointed an administrator.
Identify the main issues in the Housing Society.
b) If you were the administrator, what steps
would you suggest to rehabilitate the society?

Solution:
a) Main issues in the housing society.
According to the Maharashtra Co-operative
Societies Act, 1960 a housing society is defined as
“a society object of which is to provide its members
with open plots for housing, dwelling houses or flats;
or if open plots the dwelling houses or flats are
already acquired to provide its members with open
plots for housing, dwelling house or flats; or if open
plots the dwelling houses or flats are already
acquired to provide to its members common
amenities and services.
The main issues in the housing society in the
case are:
 MANAGEMENT OF CO-OPERATIVES23

i) Information of the managing committee.

ii) Election.
iii) Conduct of meeting.
iv) Preparation and approval of accounts.
v) The secretary’s ways of functioning.
vi) Treatment of Defaulters.

As far as the management of the co-operative

housing socities are concerned there are certain
norms laid down for the conduct of meeting,
functions of managing committee, accounting for
operations, duties and liabilities of the members
etc. This comes in the form of Bye-Laws.
Hence for managing a Co-operative housing
society these laid down bye-laws should be
followed.

c) If I were to be appointed as an
administrator I would suggest the following steps
to rehabilitate the society.
a) Convene the first general meeting within 3
months for the date of receipt of the registration
certificate.
 MANAGEMENT OF CO-OPERATIVES24

b)Appoint the provisional managing committee for

one year.
c)Elect the chairman and the vice chairman.
d)Approve the accounts.
e)Appoint the secretary.
f) Prepare draft of amendment to the bye-laws, if
required.
g)Prepare the annual budget.
h)Finally I would define the role, duties and
responsibilities of secretary as well as the
members of the society.

All the activities of the society would be

conducted as per pre-defined bye laws.