(i) Limitation of capital. Co-operatives can usually muster a limited amount of capital because the members usually come from a limited area or class an usually have limited means. The principle of one-man-vote and the limit on dividends also dampen the enthusiasm of investing members.

(ii) Excessive State regulation. Co-operatives are exposed to a considerable degree of regulation by the co-operative department an are almost over-administered. This interferes with the flexibility of its operation and the efficiency of its management.

(iii) Inefficiency of management. The management of a co-operative vest in the managing committee which generally lacks technically knowledgeable and experienced people. Proper managerial personnel may not be attracted toward a co-operative on account of its limited capacity to pay proper rates of remuneration. Even otherwise, employee loyalty may be adversely affected due to indifference and on the part of the management.

(iv) Lock of secrecy. The affairs of co-operatives are generally so much exposed to the members that it becomes difficult for them to maintain proper business secrecy.

(v) Intrigue and bickering among members. Once the first wave of entheiasm about the co-operative ideals is exhausted, intrigue and factionalism arise among members. This affect the autonomy of the management and the general attitude of the employees too.

(vi) Insufficient motivation. Since the rate of the return to the members is limited by law, the members of the managing committee do not feel motivated enough to make success of the enterprise.