PRIVILEGES OF CO-OPERATIVE SOCIETY
67. Form of Declaration to be made by Members Borrowing Loans.
1. A declaration required to be made under clause (i) and clause (ii) of section 37, shall be in Form 14.
2. A register of such declaration shall be kept by the co-operative society in Form 15.
3. A charge on any immovable property created by a member in favour of a co-operative society for amount borrowed or likely to be borrowed by him, from time to time, shall, subject to the provisions of clauses (iv) and (vi) of section 37 continue in force till the person creating the charge ceases to be a member of the society.
4. Where a member of a society creates a charge on his land or on his interest in any land as a tenant by declaration under-section 37, the society may, if compelled to make use of such property for the recovery of the loan granted to such member against the security of such property or interest in the property, utilise the whole or any portion of such property which may be sufficient to satisfy the amount due with interest and any incidental expenses incurred in that connections.
5. Where a charge is created by a member on his land or on his interest in any land as a tenant by declaration under section 37 society, shall record or cause to be recorded such particulars of charge in the Record of Rights maintained by the village officers of the village where such property is situated. Such recording of the charge in the Record of Rights of the village shall be treated as a reasonable notice of such charge created under section 37.
6. Without prejudice to the generality of the powers given in Explanation below section 37. Financing Bank, all agricultural credit and non-credit co-operative societies shall come within the purview of section 37 from the commencement of the rules. (Amended on 9.9.88)
68. Restriction on Borrowing by Society with Limited Liability.
1. A cooperative society shall receive deposits and loans only to such extent according to the following parameters or as per provisions contained in the byelaws. The general body of a society shall be competent to fix the maximum credit limit in respect of the society based on the audited accounts and the committee of a society shall be competent to fix the maximum credit limit of an individual borrower. (Amended on 6.8.97)
2. The M.C.L. of a co-operative society may be fixed by the general body at any limit but not exceeding the limits given below:- .
(i) Society other than Consumers, Housing and Financing Bank
(a) Society classified 'A' during the last audit.
Seven times the paid-up share capital plus accumulated reserves and undistributed profits minus the total of losses and loans falling overdue payable to Financing Bank and other agencies.
(b) Societies classified 'B' and 'C' during the last audit.
Five times the paid-up share capital plus accumulated reserves and undistributed profits minus the total of losses and loans fallen overdue payable to Financing Bank and other agencies.
(c) Societies classified 'D' during the last audit and newly registered Societies.
Three times the paid share capital less loss and over-dues.
Explanation - The classification of societies as (A) (B) (C) (D) shall be made on the norms specified in Schedule (VI) (Annexed). (Added on 24.5.82)
(ii) Consumers Societies.
Against hypothecation or pledge of goods, the M.C.L. will be equal to the aggregate of paid-up share capital, accumulated reserves, undistributed profits and value of the goods in stock hypothecated or pledged.
(iii) Housing Societies.
Twenty times the paid-up share capital plus accumulated reserves and profits provided the repayment of principal and interest is secured by mortgage or pledge of tangible assets and securities.
(iv) Financing Bank.
Fifteen times the paid-up share capital plus accumulated reserves minus loses, actual bad debt and overdue interest recoverable.
Provided that the Registrar may reduce or increases the above M.C.L. at the time of according his approval, (3) A co-operative society which accepts deposits 'and loans from members alone and has no liability to any person other than the members, may receive deposits and loans from the members in excess of the limit referred to in sub-rule
(3) if the excess amount is deposited in the fixed deposit account with the Financing Bank or is invested in Govt. securities specified in section 20 of the Indian Trust Act, 1882 provided that the amount so deposited or invested or any part thereof is not withdrawn or otherwise utilized except for the payment of the deposit accepted in excess of the aforesaid limit.
69. Raising of Funds of Co-operative Societies.
1. Every co-operative society, which has a share capital shall provide in the bye-laws the maximum amount of such share capital, the number of shares into which It is divided, the class of shares, the face value of each share of each class and the rights and liabilities attaching to each class of shares and where the full amount of the shares is not payable on allotment, the amount and the number of installments in which it is required to be paid and such other incidental matters.
2. Any co-operative society, which is authorized under its bye-laws to raise funds by the issue of debentures and bonds may, with the prior sanction of the Registrar, frame regulations regarding the maximum amount to be raised by the issue of debentures and bonds, the class or classes of debtors and bonds, the face value of each-debenture or bond, the date on which the debentures or bonds are to be redeemed, the rate at which interest is payable, the terms and conditions regarding transfer of debentures and bonds and other incidental matters.
3. The total amount of debentures and bonds issued at any time together with the other liabilities incurred by the society shall not exceed the maximum amount which the society can borrow under the provisions of rule 68, and its bye-laws.
4. The Registrar may, by general or special order, lay down such additional conditions as the societies may receive deposits, issue debentures or raise loans from any creditor other than the Financing Bank.
70. Maintenance of Liquid Resources and Distribution of Assets.
Every co-operative society which obtains any portion of its working capital by deposits, shall:-
(i) Maintain such liquid resources and in such form as may be specified by the Reserve Bank of India in the case of Urban Thrift and Credit Banks and Financing Bank and by the Registrar in the case of other Societies and
(ii) Utilize only such portion of its working capital intending business and distribute its assets in accordance with such standards as may be specified from time to time by the Registrar. (Amended on 24.5.82)
71. Regulation of Loans to be granted by Societies.
1. In case of grant of loans against security movable or immovable property, the lending co-operative society shall maintain such margin as the Registrar may, by general or special order, direct from time to time with reference to different commodities securities or classes of co-operative societies.
2. It shall be lawful for a society to grant loans without taking security of movable or immovable property if the purpose for which the loans given is considered production-worthy or credit-worthy and it is reasonably expected that the loans wilt be repaid by the loanee. The Registrar may issue directions to the co-operative societies to ensure that credit-worthy purposes indicated above receive finance from the societies without any difficulties on the one hand, and without being detrimental to the financial interest of the societies on the other.
3. Except with the general or special permission of the Registrar, the loan advanced to a member by a society, or to a co-operative society by the Financing Bank. shall be subject to such conditions as may be laid down by the Registrar, with the approval Of the Financing Bank, including the maximum amount to be advanced and the period of repayment, both in regard to total advances to members and societies as also against different types of securities.
4. No society shall carry on transactions on credit or the Registrar in that behalf may issue sanction trade credit to its members or to non-members except in accordance with the general directions that.
5. In the matter of grant loans to societies by the Financing Bank or to members by primary co-operative societies, the Registrar may lay down. with the approval of the Financing Bank. the procedure regarding receiving applications, assessing credit needs, making inquires in respect of the production programme for which such loan is required and the procedure to finally sanctioning the loan as also the rates of finance to be followed from year to year and the nature of inquiries to be made for the purpose of financing of different crops and imposition of certain conditions regarding proper utilization of loan and sale of agricultural produce through specified co-operative organizations before such finance is granted.
6. The Registrar may by general or special order prohibit or regulate grant of loans by the Financing Bank or a co-operative society where such grant is considered neither in the interest of the co-operative society nor in the interest of the development of co-operative movement on sound lines.
72. Conditions to be complied with by members applying to Loans.
(1) Every member of a co-operative society applying for a loan from the co-operative society shall be required to hold shares in such manner and in such proportion to the amount of loan applied for by him as may be specified in the bye-laws of the co-operative society.
(2) Subject to the maximum limit specified in the bye-laws, a loan to be granted to a member of a resource society, and the period of its repayment shall be in accordance with the standard laid down by the Registrar. A loan in excess of the maximum amount may be granted to a member with the previous sanction of the Registrar.
73. Credit Limits by non-credit Societies.
(1) No co-operative society whose objects do not include grant of loan or financial accommodation to its members shall grant loans or sanction credit to any member without the sanction of the Registrar. Provided that any co-operative society which has as some of its objects, supply of goods or services required by members for production purposes, may supply goods or provide service on credit against sufficient security on condition that the cost of the goods supplied or services provided shall be recoverable from the amount of the sale proceeds of the agricultural produce or other goods produced by the members.
(2) A consumer co-operative society may sell goods on credit to its members and other customers up to the extent of deposits received from them. .
74. Manner of recalling of Loan.
(1) Notwithstanding anything contained in the agreement entered into with the borrowing member, the committee, of a co-operative society shall be entitled, after giving a week's notice to such member, to recall the entire loan amount immediately, when it is satisfied that the loan given has not been applied for the purpose for which it was given or there has been breach of any of the conditions for grant of such loan.
(2) Nothing in this rule shall be deemed to preclude the Registrar from directing the co-operative society to recall a loan of his own motion, when it is brought to his notice that the loan given by the society has been misapplied or conditions thereof have not been followed. The Registrar may make in the matter such inquires as he may deem necessary and after giving a show cause notice to the cooperative society issue, with the prior approval of the Financing Bank, necessary' directions to the co-operative society. The directions issued by the Registrar in this respect shall be complied with by the co-operative society.
75. Shares not to be Hypothecated to the society.
The shares of society shall not be hypothecated to that society but its members as a security for a loan.
76. Loans on surety ship of non-members.
No, society shall make any loan to a member on a bond secured by the suretyship of a non-member, provided that the Registrar may for special reasons, exempt any society by name the operation of this rule.
The Registrar may, from time to time, issue such directives as he considers necessary for the successful conduct of the business of a co-operative society or class of co-operative societies.
78. Loans and subsidies by Government.
(1) Loans and subsidies to a co-operative society or class of co-operative societies may be granted by Government by a general or special order from time to time.
(2) An application by a co-operative society for a loan or subsidy or both from a Government Department or Government sponsored agency shall be made through the Registrar. While forwarding the application, the Registrar shall record his opinion regarding the eligibility of the co-operative society for the said loan or subsidy or both, its financial position and the desirability of sanctioning to the society the said loan or subsidy or both.
(3) A co-operative society receiving Government loan or subsidy or a society in which a share or shares have been subscribed or liability by way or guarantee has been undertaken by the Government, shall furnish such information and submit such turns as the sanctioning authority or the Registrar may from time to time, require. (Added on 24.5.82)
(4) In case of default in repayment of loans, the Financing Bank shall charge a penal rate of interest not exceeding 1% (percent) per annum over and above the normal rate of interest from the defaulting societies.
(5) In case of default in repayment of loans by the members of any class of societies, the penal rate- of interest shall be charged not exceeding 3 percent per annum, by the co-operative society over and above the normal rate of interest from the date of default. (Added on 24.5.82)