8 Limitations Faced by Co-operative Societies


This article provides information about the limitations faced by Co-operative Organisations:

The Limitations faced by co-operative Organisation are:

1. Limitations of capital:

Profit, the main force attracting capital, is missing.


The members in a co-operative society are people with limited resources, and therefore, they cannot make large capital contributions.

2. Inefficient management:

A co-operative society generally suffers on account of inefficient management. Due to limited financial resources, it is generally not in a position to employ and retain competent professional managerial personnel. It, therefore, has to depend on its own members who generally lack in skill and experience. Voluntary service is good but it is no substitute for efficiency, skill, maturity, and experience of professionals.

3. Lack of unity and cohesion:

After an enthusiastic start, the functioning of a co-operative society is generally marred by a lot of rivalry, factionalism, and politicking among its members, and this reflects on the efficiency and effectiveness of the society. One of the reasons responsible for this is the lack of proper training and education to members in co- operative principles and functioning.

4. Limitations of size:

Apart from the limitations of capital, management, and cohesive functioning, a co-operative society also suffers on account of its small size. Since a co­operative is generally organised to cater to the requirements of a limited membership, and therefore, its operations are limited, and that makes the size of the organisation small.

5. Inadequate motivation:


Motivation is conspicuous in a co-operative society by its absence. Low or no dividend to shareholders and nominal remuneration to the members of the society act as dampers on their activity and enthusiasm.

The net result of all this is that the have- not’s generally cluster around a co-operative society and dishonest and less competent people come to occupy managerial positions in it. This sets a vicious circle in motion.

6. Delays in decision-making and decision-implementing:

The conduct of business of a co­operative society is strictly according to the rules and regulations framed in this regard by the government. No one single office-bearer can take any important decision on his own.

It can be taken only by the managing committee for whose meeting reasonable notice has to be given to all members. Matters of larger significance can be decided only at the general meeting of the society which is really a time consuming affair. Delay is experienced not only at the level of taking decisions but also in their implementation.

7. Excessive government interference and lack of secrecy:


The functioning of a co-operative society is generally subjected to a lot of supervision and regulation by the co-operative department — it has to submit its accounts regularly to the Registrar, it has to get its accounts audited every year by auditors of the co-operative department, and in some cases it has to get the appointment of its managerial personnel approved by the Registrar.

8. Lack of public confidence:

A co-operative society generally does not enjoy much public confidence due to both the excessive state regulation and the dishonest and political conduct of the society’s office bearers.

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