Chapter VI PROPERTIES AND FUNDS OF

No part of the funds of co-operative society shall be divided by way of bonus or dividend or other-wise among its members; Provided that after at least one-tenth of the net profits in any year have been carried to the reserve fund, payments from the remainder of such profits and from any profits of past years available for distribution may be made among the members to such extent and under such conditions as may be prescribed by the rules or bye-laws.

Any co-operative society may, with the sanction of the Registrar, after one-tenth of the net profits in any year has been carried to the reserve fund, contribute an amount not exceeding five percent of the remaining net profits to any purpose connected with the development of co-operative movement or charitable purpose as defined in section 20 of the Charitable Endowments Act, 1890(VI of 1890).

A co-operative society shall out of its net profits in any year credit such portion of the profits not exceeding 5 percent as may be prescribed to the Co-operative Education Fund constituted under rules.

(1) A co-operative society may invest or deposit its fund- (a) in the post office savings bank; or (b) in any of the securities specified in section 20 of the Indian Trust Act, 1882; or (c) in the shares or securities of any other co-operative society; or (d) with any bank carrying on the business of banking approved for this purpose by the Registrar; or (e) in any other mode permitted by the rules. (2) Any investments or deposits made before the commencement of this Act which would have been valid if this Act had been inforce are hereby ratified and confirmed.

(1) A co-operative society shall not make a loan to any person other than a member: Provided that with the general or special sanction of the Registrar a co-operative society may make loan to another co-operative society. (2) Nothwithstanding anything contained in sub-section (1), a co-operative society may make a loan to a depositor on the security of his deposit.

Save as is provided in sections 45 and 46, the transactions of a co-operative society with person other than member shall be subject to such prohibitions and restrictions, if any, as may be prescribed.