Chapter XI PROPERTIES AND FUNDS

(1) A co-operative society may invest or deposit its funds– (a) in the post office savings bank; (b) in any of the securities specified in section 20 of the Indian Trust Act, 1882; (c) in the shares or securities of any other co-operative society; (d) with any bank carrying on the business of banking approved for this purpose by the Registrar; or (e) in any other mode as may be prescribed. (2) Co-operative Credit Structure may invest its funds with any regulatory financial institution.

No part of the funds created out of the profit of a co-operative society shall be divided by way of bonus or dividend or otherwise among its members.

(1) A co-operative society may distribute profits as per audited balance sheet for any year and from the remainder of such profits of past years, among the members to such extent and under such conditions as may be prescribed by rules or bye-laws. Provided that – (a) at least 10% of the profits of any year are carried each to the reserve fund and the bad and doubtful debt fund; (b) not exceeding 5% of the profits is carried to the co-operative education fund; (c) such percentage of the profits to carry to such other funds as are specified in the bye-laws or by the Registrar; (d) such profits may also be utilized for such purposes and in such percentage as may be prescribed. (2) The Registrar may require a co-operative society not to invest the whole or a part of its funds referred to in sub-section (1) in the business of the society. Explanation:- (i) The net profits of a co-operative society shall be calculated by deducting from the gross profit for the year, all interest accrued and accruing in relation to amounts which are overdue, establishment charges, interest payable on loans and deposits, audit fees, working expenses including repairs, rent, taxes and depreciation, bonus payable to employees under any law relating to payment of bonus for the time being in force, and equalization fund for such bonus, provisions for payment of income-tax and approved donations under the Income-tax Act, 1961 (43 of 1961), development rebate, provision for development fund, bad debt fund, price capital redemption fund, investment fluctuation fund, provision for retirement benefits to employees and after providing for or writing off bad debts and losses not adjusted against any fund created out of profit. (ii) Society may add to the net profits for the financial year interest accrued in the preceding year, but actually recovered during the current year. (3) There shall be no compulsion on Co-operative Credit Structure for contribution to any funds other than those required for improving the net worth/owned funds of a co-operative society: Provided that the Registrar shall lay guidelines in consultation with the National Bank regarding payment of dividend.

(1) It shall be competent for the government to constitute one or more guarantee funds on such terms and conditions, as it may deem fit, for the purposes of meeting losses that might arise as a result of loans being made by a co-operative society on titles to immovable property subsequently found to be defective or for any other purposes under this Act, for which in the opinion of the Government it is necessary to provide for or create a separate guarantee fund. (2) Such society shall contribute to such funds at such rate and the constitution, maintenance and utilization of such funds shall be governed by such terms as may be prescribed.

No co-operative society shall write off as a whole or part of any debt or other sum due to it or any assets without the prior sanction of the Registrar.