The 97th Constitutional Amendment Act of 2011 gave a constitutional status and protection to co-operative societies. In this context, it made the following three changes in the constitution:

  1. It made the right to form co-operative societies a fundamental right (Article 19).
  2. It included a new DPSP on promotion of cooperative societies (Article 43-B).
  3. It added a new Part IX-B in the Constitution which is entitled “The Cooperative Societies” (Articles 243-ZH to 243-ZT).



Part IX-B of the constitution contains the following provisions:


Incorporation of Co-operative Societies: •         The state legislature may make provisions for the incorporation, regulation and winding-up of co-operative societies. (Article 243ZI).


Number and Term of Members of Board and its Office Bearers: (Article 243 ZJ)

•         The board shall consist of such number of directors as may be provided by the state legislature but it shall not exceed twenty-one.

•         The term of office of elected members of the board and its office bearers shall be five years from the date of election and election of a board shall be conducted before the expiry of the term of the current board (Article 243 ZK) by such body, as may be provided by the state legislature.


Reservation of seats:

•         The state legislature shall provide for the reservation of one seat for the SC or the ST and two seats for women on the board of every co-operative society having members from such a category of persons.

Co-opted members:


•         The state legislature shall make provisions for co-option of persons having experience in the field of banking, management, finance etc. to the board whose numbers shall not exceed two (in addition to twenty-one directors) without any right to vote.


Supersession and Suspension of Board and Interim Management (Article 243 ZL)


•         No board shall be superseded or kept under suspension for a period exceeding six months. (In case of cooperative banks, other than multi-state cooperative banks, this period cannot exceed one year).

•         However, the board of any such co-operative society shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the Government.

Audit of Accounts of Co-operative Societies (Article 243 ZM)


•         The state legislature may make provisions for the maintenance and auditing of accounts the co-operative societies (within six months of the close of the financial year) at least once in each financial year.
Application to Multi-state Co-operative Societies: •         The provisions of this part shall apply to the multi-state co-operative societies and these will come under ambit of central government.

Application to Union Territories:

•         The provisions of this part shall apply to the Union territories. But the President may direct that the provisions of this part shall not apply to any Union territory or part thereof as he may specify in the notification. (Article 243 ZS)