Model Bye-laws of
National level Cooperative Society/Federal Cooperative/Multi-State Cooperative
and area of operation :
As per Section 2(a)
of MSCS Act,2002
society shall be called ____________________;
As per Rule 8 of MSCS Rules, 2002
The Society shall have a principal place of business which shall be the
registered office of the society. The
Headquarter of the society shall be at
__________________. (Full address). Any change in address shall be
notified to the Central Registrar within 15 days of its change and also
published in local newspaper and shall be made by an amendment of its bye-laws
after following the procedures laid down in Sec. 11 of the Multi State Coop.
Societies Act 2002.
The Society shall have a Common Seal.
The Common Seal shall be kept in the safe custody of the Officer
authorised by the Board and shall be used on the authority of a resolution of
the Board constituted under the bye-laws of the society;
The area of
operation of the society shall extend to the ---------- states or whole of India.
The society is body corporate which sue and be sued in its name.
2. Definitions:- As per Section
of MSCS Act, 2002
The words/expressions appearing in these bye-laws shall have the following meaning unless otherwise provided :
“Act” means the Multi-State Cooperative Societies Act, 2002 as
amended time to time.
“Rules” means the Multi-State Cooperative Societies Rules, 2002 made
under Multi-State Cooperative Societies Act, 2002 and as amended time to time.
“Central Registrar”, means the Central Registrar of Cooperative
Societies appointed under the provisions of the MSCS Act;
“Bye-laws” means the
Bye-laws of the society for the time being in force which have been duly
registered or deemed to have been
registered under the Multi State Cooperative Societies Act in force and includes
amendments thereto which have been
duly registered or deemed to have been registered under the Act;
“Delegate” means a person who is duly appointed/elected by the
members of the society or part thereof in accordance with its bye-laws as its
representatives to the General Body of the society or a person who is duly
authorised by the Board of the member society to represent the society in
General body of the society of which the society is a member.
“General Body”, means all the members of the Society and in relation
to a nation cooperative society or a federal cooperative means all the delegates
of member cooperative societies or delegates of multi state cooperative society
and includes a body constituted under the provisions of the Act;
“Board” means the Board
of Directors of the Society.
“General Meeting” means a meeting of the general body of the society
and includes special general meeting;
“Chief Executive” means Chief Executive/Managing Director, by
whatever name he may be called, of the Society;
‘Officer’ means a President, Vice-President, Chairperson,
Vice-chairperson, Managing Director, Secretary, Manager, Members of the Board,
Treasure, Liquidator, an Administrator appointed under Sec. 123 and includes any
other person empowered under Multi State Cooperative Societies Act or the rules
or the Bye-laws to give direction in regard to business of the society.
“Member” means a cooperative society/individual who is admitted as
member of the society and continues to be so for the time being;
‘Nominal’ member means a person who has been admitted as a nominal
member or associate member under
the bye-law of the society.
“Multi State Cooperative Society” means a cooperative society
registered or deemed to be registered under the Multi-State Cooperative
Societies Act 2002;.
“National Cooperative Society” means a Multi-State Cooperative
Society specified in the second schedule to the Multi-State Cooperative
Societies Act, 2002;
“ Cooperative Society” means a cooperative society registered or
deemed to be registered under any law relating to cooperative societies for the
time being in-force in any State or Union Territory;
“Federal Cooperative” means a federation of cooperative societies
registered under the MSCS Act and whose membership is available only to a
cooperative society or a multi-state cooperative society;
A ‘Cooperative Bank’ means a multi state cooperative society which
undertakes banking business;
‘Reserve Bank’ means the Reserve Bank of India constituted under the
RBI Act 1934 – 2 of 1934;
‘Deposit Insurance Corporation’ means the Deposit Insurance &
Credit Guarantee Corporation established under Sec. 3 of the Deposit Insurance
Corporation Act 1961;
“Defaulter” means a member who has defaulted in payment of any kind
of dues payable to the society;
“Cooperative Year” means the period from 1st of April to
“Area of Operation” means the area from which the persons can be
admitted as members of the society.
“Cooperative Principles” means the cooperative principles as
specified in the first schedule of the Multi-State Cooperative Societies Act,
3. Objects, and functions: As per Section 5(a) of MSCS Act, 2002
The principal object of the society will be to promote the interests of all its members to attain their social and economic betterment through self-help and mutual aid in accordance with the cooperative principles.
(N.B.: The statement of objects of the society should clearly show the activities carried out / proposed to be carried out in each state from where the members are drawn.)
In furtherance of the above objects, the society may undertake any or all the following activities :-
specified as per the objects of the society)
In addition to above, federal cooperative shall also undertake following
Subject to the
provisions of this Act and any other law for the time being in force, a federal
cooperative may discharge the functions to facilitate the voluntary formation
and democratic functioning of cooperative societies as federal cooperative or
multi State cooperatives based on self-help and mutual aid.
to the generality of the provisions contained in sub-section(1), the federal
ensure compliance of the cooperative principle;
make model bye-laws and policies for consideration of its member
provide specialised training, education and data-based information;
undertake research, evaluation and assist in preparation of perspective
development plans for its member cooperative;
promote harmonious relations amongst member cooperative;
help member cooperative to settle disputes among themselves;
undertake business services on behalf of its member cooperative, if
specifically required by or under the resolution of the general body or the
board, or bye-laws of a member co-operative;
provide management development services to a member cooperative;
evolve code of conduct for observance by a member cooperative;
evolve viability norms for a member cooperative;
provide legal aid and advice to a member cooperative;
assist member cooperative in organising self-help;
(m) develop market information system, logo brand promotion, quality control and technology upgradation.
4. Membership :
Section 25 of MSCS Act, 2002
A society shall have following categories of members:-
Nominal/ associate members
Who can be
ordinary members :
Any person who resides within the area of operation of the society and
who genuinely need the services provided by the society and whose interest does
not conflict with the interest of the society;
No person shall be admitted as a member of a multi-State co-operative
society except the following namely:-
An individual, competent to contract under section 11 of the Indian
Contract Act, 1872;
Any multi-State co-operative society or any co-operative society;
The Central Government;
A State Government;
The National Co-operative Development Corporation established under the
National Co-operative Development Corporation Act, 1962;
Any other corporation owned or controlled by the Government
Any Government company as defined in section 617 of the Companies Act,
Such class or classes of persons or association of persons may be
permitted by the Central Registrar having regard to the nature and activities of
a multi-State co-operative society.
No right of membership shall be exercisable until a person has made such
payments to the Society in respect of membership or acquired such interest in
the society as may be prescribed by the society in its Bye-laws as per the
provisions of the Act and rules.
Every member shall pay an admission fee as specified in the bye-laws of
Note : No individual person shall be eligible for admission as a member of a national co-operative society or a federal cooperative.
5. Nominal or Associate Member As per Section 26 of MSCS Act,2002
Society may, in the interest of promotion of the business of the society, admit a person as nominal member or associate member on payment of fee of Rs------only.
Provided that such members will not be entitled to subscribe to the share capital of the society.
They will not be allowed to have any interest in the management of the society including right to vote, contest election as director of the board or participate in the general body meetings of the society.
As per Rule 11(a) &
11(c) of MSCS Rules,2002
The application for membership of the society shall be submitted by the applicant to the Chief Executive of the society in the prescribed form and at least ----% of the value of shares to be deposited by the applicant at the time of submission of application.
As per Rule 11(b) 25(4) of MSCS Rules, 2002
The applications for membership of the society found complete in all respects shall be disposed of within the period of four months from the date of receipt of the application by the society. The same shall be communicated to the applicant within fifteen days of the decision by Registered Post.
7. A member may, with the approval of the Board of Directors, transfer
its shares to another member
of the multi-State cooperative society.
A fee of Rs.----- per share as
mentioned in the Bye-laws, shall be payable to
the society for each such transfer.
The Board may, on application, by a Member:
approve conversion of shares allotted to it or a part thereof into those
of other denominations subject to such conditions as the Board may decide to
(ii) consolidate all or some of the partly paid shares already allotted to member.
Disqualifications of membership :
As per Section 29 of MSCS Act,2002
No person shall be eligible for being or continuing as a member of the society if :-
his business is in conflict or competitive with the business of the
b) He did not make annual transactions of the value of atleast Rs. ___________ for continuously two years or (to be specified in the bye-laws); or
He did not attend the three consecutive general meetings and such absence
was not condoned by the 2/3rd majority of the members attending the
Has defaulted in payment of all dues including contributions,
subscriptions, if any, as decided by the board of the society from time to time.
10. Cessation of membership :
The membership of the cooperative society may cease in case of :-
resignation or death of the member.
cancellation of registration of the member society;
all the shares are
transferred to another person/ society;
expelled by the general body;
incurring any of the disqualifications of membership.
11. Withdrawal from membership :
Any member of the society may withdraw from membership of the society only after ------- years by giving at least a three months notice and duly approved by the Board of the society.
Termination of membership :
30 of MSCS Act, 2002
Membership of the society may be terminated by a resolution of the general body passed by 2/3rd majority present and voting if :
Any member has defaulted in payment of dues as per bye-laws of the
society for a continuous period of one year;
(ii) Any activity of a member is found to be conflicting or competitive with the interest or activities of the society.
Rights of member :
31 of MSCS Act, 2002
of the society shall have the following rights :-
One vote in the general body meetings of the society and no
member shall be permitted to vote by proxy;
Provided that a multi-State
co-operative society or a co-operative society or any other institution which is
a member of any other multi-state cooperative society may appoint its
representative by a resolution passed by its Board to vote on its behalf in the
affairs of such multi-State cooperative society.
Right to receive notice of general body meetings as per bye-laws of the
Right to attend and take active part in the proceedings of the committee;
Take part in elections and contest for any post as per provision of the
Act, Rules and bye-laws of the society;
Inspect member registers, books of accounts or any other record and
obtain certified copies of the resolutions or documents on a payment of fee as
may be prescribed by the society from time to time.
As per Section 16 of MSCS Act, 2002
Liability of the members shall be limited to the share capital subscribed
b) Liability of every member would continue for period of two years from the date of ceasing to be member of the society.
15. Authorised Share Capital :
authorised share capital of the society shall be Rs. ________which shall
comprise of _______ shares of the face value of Rs. _________each.
Indicate details about equity holding by the Govt. of India, State Govt. or any
other Govt. undertakings.)
As per Section 35(1)
and (2) of MSCS, Act, 2002
The society may with approval of the General Body retire shares, if any,
held by the Central/State Government, Central/ State Government organizations at
any time. However, retirement of
such share shall be at face value. (Society
to clearly specify the modalities for redemption of shares).
(i) A member shall subscribe to minimum of _____number of shares ____% of
share value shall be paid at the time of application and rest in _____equal
Manner of allotment, transfer, redemption and/or repatriation shall be at
face value and as per the provisions of the Act.
18. Joint Shareholders
may be purchased in the names of more than one person jointly.
On death of a joint-holder, the surviving person/ persons shall be
recognized as joint shareholder/holders
The joint-holder of any
share shall be liable severally as well as jointly for all payments which are to
be made in respect of such share or shares.
The person whose name stands first written on the share certificate shall
enjoy all the rights of a member and be responsible for all the liabilities of a
member. He shall be entitled to
receive the annual dividend and notice of the General Meeting.
Where a share of the society is held jointly by more than one person, the
person whose name stands first in the share certificate, if present, shall have
the right to vote. But in his
absence, the person whose name stands second and, in the absence of both, the
person whose name stands next, and likewise in the absence of preceding persons
the person whose name is next on the share certificate, who is present and who
is not a minor, shall have right to vote.
19. Share Certificate
person admitted as member shall be entitled to receive a share certificate
gratis stating the number of share/s and their distinctive number/s.
The share certificates shall be signed by the Chairman, or any Director
duly authorized and the Chief Executive Officer.
The share certificate shall bear the Society’s seal.
20. Transfer of Shares
A member may transfer his share or shares after holding them for not less
than one year to any person duly approved by the Board of Directors.
The transfer is not complete until the name of
the transferee has been duly entered in the register of members and the
transfer fee of ……….. per share is paid.
If any certificate be worn out, defaced, destroyed or
lost, a new share certificate’s may be issued in lieu thereof on
payment of a fee of …………… per share.
It shall, however, be necessary to produce evidence to the satisfaction
of the Board of Directors that the share certificates were worn out, defaced,
destroyed or lost, or in absence of such evidence, on such indemnity as the
Board of Directors may deem sufficient.
member may nominate a person to receive the member’s interest in the society
after his death. Nomination shall be made in the prescribed form and entered
in the special register kept at the society’s registered office.
Prior approval of the Board shall be necessary if the person to be
nominated is an employee of the society.
22. Death of a Shareholder
death of a shareholder, the society may pay to the person or persons nominated a
sum representing the value of the shareholder’s interest in the society within
six months from the death of the shareholder.
In the absence of nomination, the society may pay to such person or
persons as may appear to the Board of Directors to be entitled to receive the
same as heir or legal representative of the deceased shareholder on his or their
executing an appropriate deed of indemnity in favour of the society.
23. Lien on Shares, Dividends and Deposits
society shall have the first and paramount lien or charge upon all the shares,
dividends and deposits of any member of past member for all moneys due from him
to the society from time to time. The
society may at any time set off any sum credited by or payable to the member or
past member towards payment of any liability of such member as past-member.
Capital and Funds :
Section 67 of MSCS Act,2002
The society may receive funds from any or all the following sources :
loans and deposits;
MAXIMUM BORROWING LIMIT
Section 67 of MSCS Act,2002
cooperative society shall be eligible to receive deposits and loans from members
and other upto ------- times of its paid up share capital plus accumulated
reserves minus any losses.
General Body :
Section 38 of MSCS Act,2002
The General Body
of a multi-State Cooperative Society shall consist of all the members of such
society. The society shall consists
(i) individual members;
Section 32 of MSCS Act,2002 (iii) Each member-society shall be represented by one delegate elected/nominated to the general body as specified in the Bye-laws of the society;
No individual can become member of a National
General Body (if applicable)
38 of MSCS Act,2002
(A Multi State Cooperative
Society with a membership exceeding 1000, may provide in its Bye-laws for the
constitution of a smaller body consisting of delegates of members of the society
elected or selected in accordance with such Bye-laws).
smaller general body may be constituted with delegates elected or selected from
among the member-societies on the basis to be elaborated in the Bye-laws of a
multi State cooperative society.
smaller body shall exercise such powers of the general body as may be specified
in the Bye-laws of the multi-State Cooperative Society
Section 38(3) of MSCS Act,2002
Such delegate of the society shall be the Chairman/President or the Chief Executive of the society or a member of the Board of such cooperative society if such member is authorised by the Board of the nominating society. Where there is no Board, such society shall be represented through its administrator by whatever name called;
delegates shall continue to be members of the General Body of the society for a
period of 5 years or till their successors are elected or as specified in the
nomination by the concerned member society.
procedure for election/selection of delegates on the General Body shall be in
accordance with the election/selection regulations framed by the Board of
Directors in accordance with the provisions of the Act & Rules framed
delegate of a member society which has not been a member of the society for
atleast 30 days before the date of General Body Meeting may attend the General
Body Meeting but shall not be eligible either to exercise the right to vote,
participate in the election or to contest election for any post;
from defaulting member societies shall not be entitled to exercise the right to
vote or to seek election to any office. The delegates of defaulting society, if
holding any office of the society shall forfeit their right to hold such office
w.e.f. the date on which the society becomes defaulter under these bye-laws
provided, due notice has been given to the defaulting society and it has failed
to pay its dues within 30 days after the receipt of notice.
Annual General Meeting :
Section 39 of MSCS Act,2002
final authority of the society shall vest in the General Body.
Board of the society under a resolution shall within six months after the close
of the corresponding year call the annual general meeting
at the principal place of business of the society
for the purpose of :
Consideration of the audited statement of accounts;
Consideration of the audit report and annual report;
Consideration of audit compliance report;
Disposal of net profits;
Approval for appointment of Auditors & fixation of remuneration;
Review of operational deficit, if any;
Creation of specific reserves and other funds;
Approval of the annual budget;
Review of actual utilisation of reserve and other funds;
Creation of specific reserves and other funds;
Approval of the long-term perspective plan and the annual operational
Review of annual report and accounts of subsidiary institution, if any;
Expulsion of members;
List of employees who are relatives of members of the board or of the
Amendment of bye-laws, if any;
Formulation of code of conduct for the members of the board and officers;
Election & removal of members
of the board, if any;
Consider the statement showing details of loans or goods on credit if any
given to any director or to the spouse of the director or his/her son or
daughter during the preceding year or outstanding against any of them;
s) Any other matter laid before it by the Board of Directors.
Amendment to Bye-laws
Section 11(2) of MSCS Act,2002
amendment of these bye-laws shall only be passed by a resolution of the meeting
of the general body in which a quorum is present by a vote of not less than two
thirds of the members present thereat and not
less than 15 clear days’ notice for the considering of such amendment has been
Special General Meeting :
Section 40 of MSCS Act,2002
Chief Executive may, at any time, on the direction of the Board shall call a special general meeting of the society as per provisions of the Act/Rules.
Notice for the General Meetings and Special General Meetings:
As per Rule 15 of MSCS Rules,2002
Annual General Meeting of the society may be called by giving not less
than 14 days notice in writing to all the members of the society
As per Rule 15(2) of MSCS Rules,2002
Special General Meeting of the society may be called by giving not less
than 7 days notice in writing to all the members of the society;
As per Rule 15(5) of MSCS
The notice of the Annual General Meeting shall be accompanied by a copy
of each of the audited balance-sheet, profit and loss account together with the
auditors report relating to the preceding year and the report of the Board of
Quorum of the meeting :
As per Rule 16 of MSCS Rules,2002
The quorum for the general meeting shall be one fifth of the total number
of delegates of the general body;
No business shall be transacted at any general meeting unless there is a
quorum at the time when the business of the meeting is due to commence;
If within half an hour from the time appointed for the meeting, quorum is
not present, the meeting shall stand adjourned and would be held after half an
hour at which the quorum will not be required.
If at any time during the meeting sufficient number of members are not
present to form the quorum, the Chairman or the member presiding over the
meeting on his own, or on his attention being drawn to this fact, shall adjourn
the meeting and the business that remains to be transacted at this meeting, if
any, shall be disposed off in the usual manner at the adjourned meeting;
Where a meeting is adjourned under sub-clause (iii) or (iv) the adjourned
meeting shall be held either on the same day or on such date, time and place as
may be decided by the Chairman or the member presiding over the meeting;
No business shall be transacted at any adjourned meeting other than the
business on the agenda of the adjourned meeting;
The adjourned meeting will transact its regular business even without the
quorum being present at the meeting.
32. Board of Directors:
As per Section 41 of MSCS Act,2002
Board of Directors of the society shall be
------(not more than 21) excluding functional directors and co-opted
Directors to be elected by the General Body (number as may be specified
in the Bye-laws;
Nominated Directors (number as may be specified in the Bye-laws);
Chief Executive and Functional
Directors shall be the ex-officio member of the Board of Directors;
Two eminent persons may be co-opted by the Board of Directors;
per Section 50(3) of MSCS Act,2002
Two subject matter specialists may be invited by the Board in any of its
per Section 48 of MSCS Act,2002
Nominees of the Central Government, if any, as per the provisions of the
(The number of the Government Nominees
shall be as per the equity share capital held by the Central Government in the
multi-State cooperative society i.e.
one person if the
equity share capital is
less than 26% , two persons if the equity share capital is 26% or more but less
than 51%; and three persons if
the equity share capital is 51%
or more of the total issued share capital)
Provided that such nominated
persons shall not exceed one third of the total number of members of the Board.
Where the Central Government or a State Government has
guaranteed the repayment of principal and payment of interest on debentures
issued by a multi-State cooperative society or has guaranteed the repayment of
principal and payment of interest on loans and advances to a multi-State
cooperative society or has given any assistance by way of grants or otherwise to
a multi-State cooperative society, the Central Government or the State
Governments in this behalf, as the case may be, or any person authorised by the Central Government, shall
have the right to nominate person on the Board of such a society in the manner
as may be prescribed.
nominated under this section shall hold office during the pleasure of the
Government by which he has been so nominated.
Meetings of the Board of Directors :
As per Section 50(2) of MSCS Act,2002
The Board of Directors shall meet at least once in every quarter;
The meetings of the Board of Directors shall normally be held at the
registered office of the society. In exceptional cases, the meetings of the
board may be held at any other place as decided by the Board;
The meetings of the Board of Directors shall be presided over by the
Chairman or in his absence by the Vice Chairman and in the absense of both
Chairman & Vice-Chairman, the Directors present in the Meeting shall elect a
Chairman for the Meeting from among themselves;
14 days notice shall ordinarily be necessary for the meeting of the Board
The quorum for the meeting of the Board of Directors shall be 1/3rd
of its total strength or as specified in the Bye-laws of the multi-State
34. Term of the Board of Directors :
As per Section 45(5) of
The term of the office of the elected Members of the Board of Directors shall be -----years from the date of election (not more than 5 years).
The term of office of the members of the Board who are nominees of the Government or institutions or federations shall be as indicated from time to time by the Government or the concerned Institutions. However, their term will be co-terminus with the term of the elected Directors/Board; and the Government/concerned institutions shall make fresh nominations for the new Board;
The elected members of the Board shall be eligible for re-election.
Powers & Functions
of the Board of Directors :
per Section 49 of MSCS Act,2002
To admit members;
To elect Chairman and Vice-Chairman/Chairmen of the society;
To authorise convening of Meetings of the General Body;
To interpret the organisational objectives and set-up specific goals to
be achieved towards these objectives;
To make periodic appraisal of objectives;
To appoint, suspend or remove the Chief Executive and such other employee
of the society as may be prescribed;
To make provisions for regulating the appointment of the society and the
scales of pay, allowances and other conditions of service, including explanatory
action against such employees;
To place the annual report, annual financial statements, annual plan and
budget for the approval of the general body;
To consider audit and compliance report and place the same before the
To acquire or dispose off immovable property;
To review the membership in other cooperatives;
To approve annual and supplementary budget;
To recommend to the General Body distribution of profits;
To raise funds;
To sanction loans to the members;
To fill any vacancy/vacancies in the Board by
To approve the panel of auditors for placing in the General Body;
To appoint such Committees, Sub-Committees or Standing Committees as may
be necessary and delegate to them such powers as may be appropriate;
To frame regulations for the election of delegates to the General Body,
Members to the Board of Directors and for the conduct of Meetings of the General
Body and the Board of Directors as per the provisions of the Act;
To take such other measures or to do such other acts as may be prescribed
or required under this act or the bye-laws or as may be delegated by the general
As per Section 53 of
The Board of
Directors shall constitute an Executive Committee and other committees or
sub-committees as may be considered necessary.
Composition & Functions of the Executive Committee or other committee or sub-committee may be specified in the Bye-laws of the Society.
As per Section 53 of MSCS
that other committees or sub-committees, other than the Executive Committee
shall not exceed 3 at a given point of time.
shall be a Chairman and a Vice-Chairman/Chairmen elected by the Board of
Directors from among themselves. The
Chairman and in his absence, the Vice-Chairman shall preside over the Meeting of
the General Body and the Board of Directors.
terms of office of the Chairman and Vice-Chairman shall be co-terminus with the
term of the elected Members of the Board unless Chairman or
Vice-Chairman/Chairmen ceases to be a Director earlier.
In case of any vacancy within this period, the Board shall fill up the
vacancy through re-election for the unexpired term of the Board.
Powers and functions of the Chairman :
shall have the following powers and functions:
He shall preside over the meeting of the general body, Board of Directors
and executive committee;
The Chairman shall sign the proceedings of all the meetings presided over
In the event of equality of
votes on a resolution the Chairman shall have an additional casting vote in the
To convene the meeting of the Board of Directors, Executive Committee and
other committees of which he is the Chairman;
The Chairman may delegate any of his powers and functions to the
40. Functional Directors
As per Section 41(3)& 51 of
Society shall have a Chief Executive (and other Functional Directors).
They shall be appointed by the Board and will be whole time employees of
the Society and Members of the Board.
41. Chief Executive
As per Section 51 of MSCS Act,2002
Powers and functions of the Managing Director :
As per Section 52 of
Subject to overall control and general supervision of the Board of Directors, the Managing Director shall have the following powers, functions and responsibilities:
To assist the Board of Directors in the formulation of policies,
objectives and planning;
To implement the policies and plans duly approved by the General Body or
the Board and furnish to the Board of Directors periodical information necessary
for appraising the activities and progress of achievement towards
implementations of the policies and programmes;
To summon meetings of various committees including the general body under
the instructions of the Chairman;
To maintain proper records of the society;
To manage the funds of the society, cause proper accounts to be
maintained and audited;
To attend to all correspondence of the society;
To be responsible for collection and safety of the funds;
To execute the policies/programmes and business of the society and take
such action as is necessary to give effect to the resolutions of the general
body, Board of Directors or any other committee constituted under bye-laws;
To sign all deposit receipts of the society with banks in accordance with
the resolution of the executive committee;
To endorse and transfer promissory notes and other securities and to
endorse, sign, encash cheques and negotiate instruments on behalf of the
To be the office of the society to sue or to be sued on behalf of the
society and sign all books and arrangements in favour of the society;
To appoint such personnel in the society as may be approved by the Board
To determine powers, functions and responsibilities of the employees of
the society of all categories;
To maintain a list of members correct and up-to-date;
To exercise administrative control in respect of all officers and staff,
including granting of leave, granting of annual increments and other matters
relating to the service conditions of the employees;
To delegate powers to other officers of the society;
To sanction contingent expenditure in so far as the amount involved is
upto Rs. __________;
To sign on behalf of the society and conduct its correspondence;
To present the draft annual report and financial statements for the
approval of the Board;
To record proceedings of meeting and have duly signed;
(xxi) To perform all duties entrusted to him and to exercise such other powers as may be delegated to him by the Board of Directors, executive committee and Chairman from time to time.
43. Deposits :
As per Sec.20,87
& 88 of
MSCS Act, 2002
Deposits may be received from
Members at any time within the limits determined under
the Cooperative Societies Act and Rules, on such rates of interest and subject
to such rules and regulations as may be fixed by the Board of Directors and also
subject to the directives issued by the Reserve Bank of India in this behalf
from time to time.
Deposits may be received on current, savings, fixed, recurring,
cumulative and under any other special scheme/s.
All the deposits of the bank shall be insured under DICGC Act 1961 and
shall be governed by the various sections of the DICGC Act.
44. Loans and Advances :
Loans, cash credits and/or overdrafts on current accounts bay be granted
to members on securities mentioned below or other security or
securities approved by the Board of Directors or without security.
Personal security and/or surety/sureties of other member/members.
Collateral security of movable and immovable property.
Industrial, mercantile, agricultural and other marketable commodities or
machinery under pledge, hypothecation or charge of the Bank.
Pledge of government, trustee securities, shares of approved companies,
debentures and fixed deposits
Insurance policies assigned to the Bank within the surrender value.
vii) Gold and silver ornaments
viii) Any other tangible security
ix) The Board may frame detailed loan regulations prescribing proportion of unsecured loans to total loans and advances, proper terms and conditions and the nature of securities acceptable for loans and advances for different purposes.
Short-term loans will be for periods up to 15 months, medium-term loans
for 15 months to 5 years and long-term loans over 5 years.
45. Linking of Shareholding with Loan
A borrower should hold at least 5 per cent of his borrowings if such
borrowings are on an unsecured basis, i.e. in the form of clean overdrafts,
loans against one or two personal sureties and purchase/discount of clean bills
A borrower against tangible securities should hold shares of the bank to
the extent of at least 2 ½ per cent of his borrowings from the Bank.
In the case of loans for small-scale industrial units, the linking of
share capital might be fixed initially at one per cent of the borrowings, to be
raised in the course of the next two years to 2 ½ percent.
The total amount of share capital held by a member will, however, have to
be within the limits laid down under the Cooperative Societies Act.
Distribution of profit :
to the provisions of the Act and Rules framed thereunder, the net profits of a
multi-State cooperative society shall be distributed by the General Body as
transfer at least 25% of net profit to the reserve fund;
credit one per cent of its net profit to the cooperative education fund
maintained by the National Cooperative Union of India;
The undistributed profits shall be added to the Reserve Fund.
However, an amount of at least 10% shall be transferred to the reserve
fund for meeting unforeseen losses.
Utilisation of Net Profit :
The balance of the net profit may be utilised for all or any of the following purposes :-
payment of dividend to members on their paid up capital at the rate as
specified in the Bye-laws;
any other privileges to members;
if any; as specified in the Bye-laws;
contribution to the education fund at the rate of 5% or more and not
exceeding 10%. The fund may be
utilised for the education and training of members, directors and employees as
approved by the Board of Directors;
Donation for the development of the cooperative movement or charitable
purpose as defined in section 2 of the Charitable Endowment Act 1890 not
Payment of ex-gratia amount to employees as approved by the Board of
such payment shall be paid only out of net profit and in no case the capital or
the reserve shall be distributed as dividend.
Investment of funds :
As per Section 64 of
MSCS Act, 2002
may invest or deposit its funds in :-
a cooperative bank including cooperative land development bank;
securities specified in section 20 of the Indian Trust Act 1882;
Shares and securities of any other cooperative society/subsidiary
Any other bank;
49. Reserve Fund
In addition to the sum prescribed under the Co-operative Societies Act
and Bye-laws , all admission fees, entrance fees, nominal membership fees,
amount of forfeited shares and dividends and donations shall be carried to the
Any loss occurring as the net result of the year’s working may with the
previous sanction of the Registrar, be made good from the Reserve Fund or from
the profits of the next ensuing year or years.
The Reserve Fund shall be separately invested in government and trustee
securities or other approved securities or in fixed deposits with the District
Central Co-operative Bank or the State Co-operative Bank.
50. Dividend :
The dividend declared shall be paid to the person whose name stands as
the registered shareholder in the books of the Society on the last day of the
co-operative year to which the dividend relates.
Dividend shall be proportionate to the amount paid on shares and the
period in whole months for which the amount stood to the credit of the
Any dividend remaining undrawn for three years after having been declared
shall be forfeited and shall be carried to the Reserve Fund of the society.
dividend shall be payable on application provided the same has not been
51. Accounts and Records
and records shall be maintained in forms prescribed or approved by the Registrar
and the Reserve Bank of India with such additions as the Board of Directors
consider necessary. Any member of
the Bank may inspect any of the registers or records during office hours in so
far as they relate to his own business transaction.
As per Sec.70(1),(2),(9) & Sec.28
The accounts of the society shall be audited by an auditor appointed from
the panel of auditors approved by the Central Registrar or from a panel of
auditors, if any, prepared by the society at least once in each year and the
remuneration of auditors shall be fixed by the Central Registrar or the society
as the case may be.
ii) Audit Committee (applicable in case of cooperative banks):
multi state coop. bank shall constitute audit committee of their boards to look
into implementation of guidelines issued by RBI from time to time in this
per Sec.84 of Act & 31 of Rules
53. Settlement of Disputes
the disputes shall be referred to Arbitration in accordance with the provisions
of the Multi State Cooperative Societies Act and Rules.
As per Sec. 85 of MSCS Act
period in disputes shall be as per the provisions of the Act.
No act of the General Body or the Board of Directors shall be deemed invalid by reason of any defect in the election of a Member thereof or by reason of any vacancy therein not having been filled in;
Service Rules :
As per Section 49(2)(e) of MSCS Act,2002
The society shall have service rules for regulating the service conditions of its employees as formulated and amended by the Board from time to time.
As per Section 69 & Rule 26(1) of MSCS Act/ Rules
Society shall maintain a Contributory Provident Fund for the benefit of its
employees in accordance with the provisions of Employees Provident Fund and
Miscellaneous Provisions Act, 1952.