- The Office of the Central Registrar of Cooperative Societies (CRCS) has given the green light for the Shri Beereshwar Cooperative Credit Society, based in Belgaum, Karnataka, to calculate its total exposure limit, along with deposits from voting members and loans, on a financial-year basis.
- This is a big operational update under Clause 7.1 of the CRCS order dated January 22, 2024.
- In an official note, the CRCS explained that according to Section 67(1) of the Multi-State Cooperative Societies (Amendment) Act, 2023, the total deposits and loans received in any financial year cannot exceed a certain multiple of the society’s financial base.
- The clarification goes on to say that the exposure limit will be calculated as a multiple—currently set at ten times—of the subscribed share capital and accumulated reserves, after accounting for any accumulated losses, as determined by the Central Government.
- This is a noteworthy change because Clause 7.1 of the previous CRCS order stated that the total exposure should not exceed the set limit “at all times,” which meant a constant cap on deposits and borrowings.
The Office of the Central Registrar of Cooperative Societies (CRCS) has given the green light for the Shri Beereshwar Cooperative Credit Society, based in Belgaum, Karnataka, to calculate its total exposure limit, along with deposits from voting members and loans, on a financial-year basis. This is a big operational update under Clause 7.1 of the CRCS order dated January 22, 2024.
In an official note, the CRCS explained that according to Section 67(1) of the Multi-State Cooperative Societies (Amendment) Act, 2023, the total deposits and loans received in any financial year cannot exceed a certain multiple of the society’s financial base.
The clarification goes on to say that the exposure limit will be calculated as a multiple—currently set at ten times—of the subscribed share capital and accumulated reserves, after accounting for any accumulated losses, as determined by the Central Government.
This is a noteworthy change because Clause 7.1 of the previous CRCS order stated that the total exposure should not exceed the set limit “at all times,” which meant a constant cap on deposits and borrowings. By specifically adding the phrase “during any financial year” in the Beereshwar case, the CRCS has allowed the society to align its exposure calculations with an annual financial-year framework, rather than a continuous, year-round limit.
However, officials made it clear that this interpretation was made in response to a specific request from the Shri Beereshwar Cooperative Credit Society and currently applies only to that particular society.
Additionally, sources indicate that the CRCS is looking into this matter more broadly and is expected to issue a general circular to clarify the exposure computation period for all Multi-State Cooperative Societies (MSCS). This aims to ensure a consistent interpretation and regulatory clarity across the board.
This clarification has been issued with the approval of the Central Registrar of Cooperative Societies.
People in the credit cooperative sector are hopeful that a general circular, if it comes out, could provide much-needed clarity on things like exposure planning, compliance, and liquidity management. It would clearly state that exposure limits should be evaluated on a financial-year basis instead of being viewed as a constant “at all times” measure under the updated legal framework.