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Credit Cooperative Society

Meaning:
A Credit Cooperative Society is an independent group of people belonging to the same class, come together voluntarily to tend to they are common, economic, social and cultural agendas and requirements through an enterprise which is jointly owned and controlled democratically by such people. It is operated for the purpose of promoting thrift, arranging credit at competitive rate and providing other financial services to its members. It reflects the willingness of the society to help each other for balancing the social responsibility and mutual help for the benefit of its members. The motive of promoting the economy and society is key for its members.


How to start it:
Any person can be part of the Credit Cooperative Society by following the procedure of registration:
  1. Certificate from the bank is required to declare the credit balance is in support of it.
  2. It should have minimum of 50 members.
  3. There should be the promoter's name and list.
  4. No objection certificate of the intensive inquiry letter.
  5. The board members should be at least 7 and maximum 21.
  6. Details and copy of pre registration of tge meeting is required which includes capital, members, the board and the operation etc.
  7. The recommended name by the members of Credit Cooperative Society.
Who can apply:
The applicability of the person is given under the section 5 of the Cooperative Society Act which says that no person may be an individual member of the registered society if he is less than 18 years of age, provided that the by- laws of the society prescribes the minimum age to be the member of the society.


Types of Cooperative Society:

  1. Producer Cooperative:
    It protects the interest of small producers which include farmers, landowners owners of the fishing operations etc. To increase the production efficiency, marketing possibilities. It helps in lower costs and strains in each area with mutual benefit to the producers.
  2. Consumer Cooperative:
    They governed by consumers of particular area for their mutual benefit. They try to provide necessary commodities at reasonable price rather than making their own profit.
  3. Credit Unions:
    Their main agenda is to help people for which they provide credit and financial services to the members at the competitive prices. Everyone has the right to be the member of the group.
  4. Marketing Cooperative Society:
    Their aim is to help the small producers in selling their products. The producers who wish to obtain reasonable prices for their output are the members of this group. It collects the output of the individual members. Various market functions are performed by the society to sell the products with the reasonable price.
  5. Housing Cooperative Society:
    They helps the people who want to construct the house with the limited income. Their aim is to solve the housing problems of the members. They construct the houses and give the option to pay the installment to purchase the house.

Act: The Cooperative Societies Act, 1912:

This act contain 10 chapters which consists of 50 sections which mainly talks about the liability of a society with objective of creation of funds to be lent to its members, and of which the majority of the members are agriculturists, and of which no member is a registered society shall be unlimited. Section 3 talks about the Registrar-The state Government may appoint a person to be Registrar of the society for the state or any portion of it, and may appoint persons to assist such registrar.

And the power is given under section 8 of the act which says that the question shall be decided by the Registrar, and whose decision shall be final. The section 48 talks about the provisions of The Indian Companies Act, 1882 shall not apply to registered societies. No person other than a registered society shall trade or carry on business under any name or title of which the word Cooperative is a part without the sanction of the state government. The conditions and the procedure for the application of the registration are also given under section7 and section 8 of this act.

RBI Guidelines:

The Madhava Das Committee had suggested that their is a need to stop the practice of primary credit societies commencing banking business without first obtaining the licence from the RBI. As per the amendment in the Act, these societies will have to comply to the norms specified by the RBI within one year of it being notified. Under the provision of Section 5(ccii) of Banking Regulation Act, 1949 (AACS), a cooperative credit society is defined as a cooperative society, "the primary object of which is to provide financial accommodation to its members and includes a cooperative land mortgage bank." This type of institutions are thrift societies. The distinction between a primary credit society and a cooperative credit society is with reference to their nature of business.

The primary object or principal business of a primary credit society is the transaction of banking business. When its paid up capital and reserves attain the level of Rs.1 lakh, a primary credit society automatically becomes a primary cooperative bank. However, even after a primary credit society becomes a cooperative bank, it has to apply to RBI for a license to carry on banking business. But it can carry on banking business until it is granted a license or notified that a license cannot be granted to it.

Rules, procedures and the registration of the Credit Cooperative Society:
Section 8 of the Cooperative Society Act, 1912 talks about the application for the registration:
  1. For purposes of registration an application to register shall be made to the Registrar.
  2. The application shall be signed:
  3. (a) in the case of a society of which no member is a registered society, by at least ten persons qualified in accordance with the requirements of section 6, sub-section (1); and
  4. (b) in the case of a society of which a member is a registered society, by a duly authorized person on behalf of every such registered society, and where all the members of the society are not registered societies, by ten other members or, when there are less than ten other members, by all of them.
  5. (3) The application shall be accompanied by a copy of the proposed by-laws of the society, and the persons by whom or on whose behalf such application is made shall furnish such information in regard to the society as the Registrar may require. Section 9 talks about the registration that if the Registrar is satisfied with the by laws and the procedures of the society that it is not against the Cooperative Society Act then he has the right to register the society and its by-laws. And for the evidence of the registration a certificate is assigned by the Registrar shall be the conclusive evidence unless it is proved that the registration of the society has been cancelled.

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