CHAPTER V
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)