These are small sized units formed in the cooperative sector that function both in urban as well as non-urban centres. In our country, cooperative banks offer loan money to small borrowers in the industrial as well as trade sectors in addition to professional and salary classes. The cooperative banking structure in our country is broken into four categories i.e. primary co-operative credit society, state co-operative banks, central co-operative bank, and land development banks.Urban co-operative banks are further divided into weak and urban banks, on the basis of certain parameters of their individual performance. India had a total of 261 weak banks at the end of June in 2001.
Co-operative banks are controlled by the Reserve Bank of India and administered by the Banking Laws (Cooperative Societies) Act, 1965 as well as Banking Regulations Act, 1949. Rural cooperative banks are administered by the state registrar of cooperatives.
Urban cooperative banks have a changing (i.e decreasing). The capital requirement of Rs 4 crore as well as a membership of minimum 3,000 in a population of more than Rs 10 lakh is required. The figure of minimum membership keeps decreasing with a decrease in population and vice versa.
Urban cooperative banks are enforced to maintain a SLR equivalent to 25% of its total net demand and bank liabilities.
If in case, the bank fails to comply with the minimum share capital norms, it won’t be eligible for survival.
It was very easy to open a cooperative bank with a minimum capital of Rs 15 lakh. But no more so. The Reserve Bank had announced that the minimum capital requirements for cooperative banks would soon shoot up to as much as Rs 4 crore.
It is said that under the existing norms, a cooperative bank can easily be set up with a minimum capital of Rs 15 lakh, which will now be increased to Rs 50 lakh for the banks operating in the backward areas and Rs 3 crore for urban areas which are already having an appropriate banking infrastructure.
An (urban) cooperative bank, as in the condition of the commercial bank, is vital to get a license from the Reserve Bank of India, under the provisions of Section 22 of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies).
The primary (urban) the various cooperative banks operational in the country from March 1, 1966, onwards (when some banking laws were applied to UCBs), were needed to apply to the Reserve Bank of India. They were given three months to acquire a license to carry on their banking business. On the other hand, the existing unlicensed primary (urban) cooperative banks can easily carry on with their banking business till they are refused a license by the Reserve Bank of India.
As per the provisions of Section 23 of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies), it is mandate for the main (urban) cooperative banks to obtain permission from the Reserve Bank of India for opening its branches.
All the regulatory functions of Urban Banks Department disclose the monitoring compliance in accordance with the provisions of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies) by urban cooperative banks. These provisions include the following:
According to the provisions of the Banking Regulation Act, 1949 Section 11 (As Applicable to Cooperative Societies), none of the primary (urban) cooperative bank can begin or even carry on banking business if the real or exchangeable value of its paid-up capital as well as reserves is anytime less than Rs.one lakh.
The Cooperative Societies Act, 1912 broadened the domain of cooperation amongst its members and implemented for administration by a central organization. Any cooperative society, that has its object as the promotion of the economic interests of its members in consonance with the co-operative principles might be enrolled with limited or unlimited liability by filing application to the registering authority with essential documents to be provided by them
To form a society, law mandates that 10 members minimum must show intention to be part of the society having same aim and objective to be achieved through the society.
Once a group of individuals have a desire to form a society the next step should be there must be a provisional committee of which everyone is part of.
Formally when a chief promoter has been elected by the set of individuals among them, they have to then select a name for the co-operative society which they wish to form
Once the name of the society is selected by the members then they have to make an application to the registration authority stating that they have a intention to formulate a society. The selected name of the society has to be submitted to the authority for its approval and registering authority has to confirm that name is in conformity with laws and issue a confirmation certificate to the members. Then when the members get their name approval from the authority it is valid for 3 months from the date of approval.
Erstwhile the name approval comes from the concerned authority, the entrance fee and the share capital must be collected from the concerned prospective members to meet the statutory requirements under law.
Once the prescribed fee as well as the share capital is collect from the prospective members, then as per the instructions of the registering authority, the promoter has to open a bank account in the name of the society and deposit the mentioned fees and share capital in that account and a certificate has to be obtained from the bank to that effect
On completion of the bank formalities, the promoter has to apply for the society formation to the registration authority and it has to be accompanied with set of documents, they are
Form No. A in quadruplicate signed by 90% of the promoter members
All of these testimonials have to be deposited at the time of applying for registration of the society to the registering authority and the authority after it is satisfied with the documents submitted to it has to apply its mind to whether or not to register the said society.
After the submission of the said documents has mentioned in step 7, the registrar of that municipal ward has to enter the particulars in the book called the “register of Application” which is generally specified in form B and give it a serial number to the application.
Then the registrar after perusal of the records submitted to him/her has to make a decision whether has to issue a certificate of registration or not and if there are any discrepancies noticed then he/she has to inform the members of the same and get it rectified if any.
The final step is that the registering authority after being satisfied with the documents, in case they are meeting the legal requirements: it will notify the registration of the society in the official gazette mentioned by the state or central government and should issue the registration certificate of the society and give it to the members of the society.
In India, Co-operative Societies were regarded as ideal instruments to motivate the people to come together and help themselves in the process of eliminating the unscrupulous middlemen making a huge profit at the expense of the society.
The main guiding factor if an individual or group of individuals want to form a society must be whether all the concerned members have common goal to achieve or not, it is important factor because only when they share common desire or intention then only society is desirable otherwise the whole purpose of forming a society will be defeated.
Societies like any other business structure come with certain advantages and disadvantages, they are:
A co-operative Society utilizes the funds by giving loans to the members and in case the surplus remains then they invest it as per the Co-operatives society Act / Rules / By-Laws. They give loans directly to people or business for small and medium purpose under different heads like Housing Loan, Gold Loan, Vehicle Loan, Personal Loan, Business Loan, Food Grain Loan, and Consumer Loan. EMI is fix by co-op society for members and full proof agreement on stem paper are done for loan.
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