Regulations of loans to be granted by credit co-operative societies by Maharashtra Government.
Co-operative credit societies are credit institutions characterized by member ownership and control. It registered with the primary goal of societal progress, they emphasize providing accessible credit at fair interest rates. The purpose of the co-operative credit society is to deposit procurements from its members. Designed to provide financial assistance to their members. It helps to minimize additional expenses associated with intermediaries in business. Benefits from loans with favourable interest rates. Registration in these societies brings numerous advantages and financial security. Credit co-operative societies are open to anyone to join without any membership. These societies are aided by the state and the national government and are found in both rural and urban areas.
The rules of co-operative societies are:
Regulation of loans to be granted by societies:
In case of the grant of loans against security of moveable or immovable property, the lending society shall maintain such margin as the Registrar may, with the approval of the Apex Bank, by general or special order, direct from time to time with reference to different commodities, securities, or classes of societies. (1) In the case of cash credit, the amount of the loan shall not exceed such a multiple of the owned funds of the borrowing society as may be laid down by the registrar with the approval of the concerned financing agency from time to time. (2) It shall be lawful for a society to grant loans without taking security of moveable or immovable property if the purpose for which the loan is given is considered production-worthy or creditworthy and it is reasonably expected that the loans will be repaid by the loanee. The Registrar may, with the approval of the Apex Bank, issue directions to societies to ensure that creditworthy purposes indicated above receive finance from the societies without any difficulties on the one hand and without being detrimental to the financial interests of the societies on the other. (3) The Registrar may recognize a central bank as the central financing agency, which shall be primarily responsible for financing credit requirements for all creditworthy purposes through the concerned societies in its jurisdiction. On such recognition, such bank shall be responsible for making all possible efforts to mobilize local resources to make loans available to the societies in its area. Such loans may be granted for creditworthy purposes, giving due importance to the requirements of various states of the producers and cooperative societies with reference to the linking up of credit with cooperative processing or cooperative marketing. (4) Except with the general or special permission of the Registrar, the loan advanced to a member by a society or to a society by a bank shall be subject to such conditions as may be laid down by the Registrar with the approval of the Apex Bank, including the maximum amount to be advanced and the period of repayment, both in regard to total advances to members and societies as well as against different types of securities. (5) No society shall carry on transactions on credit or sanction trade credit to its members or to non-members except in accordance with the general directions that may be issued by the Registrar on that behalf. (6) In the matter of grant of loans to societies by Central Banks or to members by Primary Societies, the Registrar may lay down with the approval of the Central Banks, the procedure regarding receiving applications, assessing credit needs, making inquiries in respect of the production programme for which such loan is required and the procedure for 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 utilisation of loan and sale of agricultural produce through specified co-operative organisation, before such finance is granted. (7) The Registrar may, with the approval of the Apex Bank, by general or special order, prohibit or regulate the grant of loans by a central bank or a society where such grant is considered neither in the interest of the society nor in the interest of the development of co-operative movement on sound lines.
Conditions to be complied with by members applying for loans:
(1) Every member of a society applying for a loan from the 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 by-laws of the society. (2) Subject to the maximum limit specified in the by-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 in consultation with the Central Bank and the Federal Society. A loan in excess of the maximum amount may be granted to a member with the previous sanction of the Central Bank and the Federal Society to which the society is affiliated, provided that where the amount of the loan exceeds twice the maximum limit contained in the by-laws, prior sanction of the Registrar shall also be obtained.
. Credit limits by non-credit societies:
(1) No society whose objects do not include the grant of loans or financial accommodation to its members shall grant loans or sanction credit to any member without the sanction of the Registrar. Provided that any society that has, as one of its objects, the supply of goods or services required by members for production purposes may supply goods or provide services on credit against sufficient security on the 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 member. (2) A consumer society may sell goods on credit to its members and other customers up to the extent of deposits received from them.
Restrictions on borrowing from more than one credit society:
(1) Every person who is a member of more than one resource society (other than a Land Development Bank, a Central Bank, or a marketing society) dispensing credit shall, if he has not already made one, make a declaration in Form that he will borrow only from one such society to be mentioned in the declaration and shall send a copy of such declaration duly attested to all societies of which he is or has become a member. (2) Any person who continues to be a member of more than one such society without complying with the provision of this rule shall be liable to be removed from the membership of any or all such societies upon receiving a written requisition from the Registrar to that effect, provided that the society from which a person has borrowed may permit him to borrow from any other society of which he is a member to such extent and subject to such conditions as may be laid down by it. (3) The Registrar may, for reasons to be recorded in writing, exempt any person or persons from the operation of this rule or prohibit any person or persons from borrowing from more than one society, notwithstanding that permission of the society under proviso to sub-rule (2) has been obtained by him.
Limits on loans against fixed deposits:
(1) When a society makes a loan to a depositor on the security of his fixed deposit with the society, the amount of the loan shall not exceed 90 percent of the deposit amount, and the period for which the loan is granted shall not extend beyond the date of maturity of the fixed deposit.
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