Chapter VII Chapter VII

No part of the funds other than the net profits of a society shall be paid by way of bonus or dividend or otherwise distributed among its members: Provided that a member may be paid such remuneration, allowances or honoraria and on such scale as may be laid down by the bye-laws for any services rendered by him to the society.

(1)A society shall, out of its net profits in any year,- (a)transfer an amount not being less than fifteen per cent of the net profits to the reserve fund; and (b)credit such portion of the net profits, not exceeding five per cent, as may be prescribed, to the Co-operative Education Fund referred to in clause (xix) of sub-section (2) of section 109. (c) Ten percent of the net profit to the Co-operative Member Relief Fund as may be prescribed. (2)The balance of the net profits may be utilized for all or any of the following purposes, namely:- (a)payment of dividends to members on their paid up share capital at such rate not exceeding twenty five per cent as may be prescribed; (b)payment of bonus to members on the amount or volume of business done by them with the society, to the extent and in the manner specified in the bye-laws; (c)seven percent of the net profit to Agricultural Credit Stabilization Fund; (cc)five percentage of net profit to the Professional Education Fund maintained by the Registrar; (d)donations of amounts not exceeding ten percent of the net profits for any charitable purpose as defined in section (2) of the Charitable Endowments Act, 1890(Central Act 6 of 1890); and (e)balance of net profit may be utilized for any or all of the purposes specified in the bye-laws of the societies except for payment of bonus to employees. (3)Notwithstanding anything contained in section 18 of the Act, in the case of Kerala State Co-operative Bank the term ‘member’ shall include nominal and associate members, for the purpose of clause (a) of sub - section (2).

The immovable property acquired by a society through a sale by the sale officer or through any legal proceedings for realization of loan amount shall be disposed of by the society within seven years from the date of acquisition with prior sanction of the General body and the Registrar.

A society may invest or deposit its funds— (a)in Government Savings Bank; or (b)in any of the securities specified in section 20 of the Indian Trusts Act, 1882 (Central Act 2 of 1882); or (c)in the shares or securities of any other society approved for the purpose by the Registrar by general or special order; or (d)in any bank approved for the purpose by the Registrar; or (e)in any other prescribed manner.

(1)The Government may, by notification in the Gazette, frame a scheme to be called the “Consortium Lending Scheme” for the purpose of providing loans for infrastructure development, to societies, local authorities, development authorities or similar institutions, on government guarantee subject to such terms and conditions, as may be specified in the said scheme. (2)A society may contribute to the Consortium Lending Scheme, at such rates, as may be specified in the scheme.

A society shall receive deposits and loans only to such extent and under such conditions as may be prescribed or as may be specified in the bye-laws.

(1) A society shall not make a loan to any person or a society other than a member: Provided that the above restriction shall not be applicable to the Kerala State Co-operative Bank: Provided further that, with the general or special sanction of the Registrar, a society may make loans to another society. (2)Notwithstanding anything contained in sub-section (1), a society may make a loan to a depositor on the security of his deposit. (3) Granting of loans to members or to non-members under sub-section (2) and recovery thereof shall be in the manner as may be specified by the Registrar.

Save as is provided in sections 58 and 59, the transactions of a society with persons other than members shall be subjected to such restrictions, if any, as may be prescribed.

(1) A society shall establish a contributory provident fund for the benefit of its employees, to which shall be credited all contributions made by the employees and the society in accordance with the rules or the Employees Provident Funds Act, 1952 (Central Act 19 of 1952) whichever is more beneficial: Provided that the contributory provident fund established under this sub- section shall not apply to the employees of such society to which the provisions of the Self Financing Pension Scheme framed under sub- section (1) of section 80A are made applicable and such society shall establish a Provident Fund in such manner and subject to such conditions or restrictions, as may be prescribed, for the benefit of such employees. (2) A provident fund, whether contributory or not, established by a society under sub-section (1) — (a)shall not be used in the business of the society; (b)shall not form part of the assets of the society; (c)shall not be liable to attachment or be subject to any other process of any court or other authority; (d)shall be deposited in the financing bank of the area.

The employees of a society shall be entitled to gratuity at such rates and on such conditions as prescribed.