Co-operative BanksNew Modern Bye Laws

By Bhushan B. Paithankar

COMPARATIVE STATEMENT OF PROVISIONS IN EXISTING BYE-LAWS

viz-a-viz NEW MODEL BYE-LAWS

SHARES

Existing provisionThe Authorised Share Capital of the Bank is Rs.1000 lakh divided into 100 lakh shares of Rs.10.00 each together with entrance fee of Rs.10 only

New Bye-Law The Authorised share capital of the Bank is Rs.10.00 crores (Rupees Ten Crores only) divided into 1.00 lakh shares of Rs.1000 each.

Recommendation The Authorised Share Capital of the Bank is Rs.10 crore divided into 100 lakh shares of Rs.10.00 each together with entrance fee of Rs.100 only

Cl.9) MEMBER

Existing provisioniv)The individual has subscribed to and fully paid for at least one share of the Bank.

New Bye-Law• CONDITIONS FOR AN ORDINARY

MEMBERSHIP• b)has paid admission fee of

Rs.100/-or as may be stipulated by the Board of Directors and paid atleast value of one share of the bank.

Recommendation • b)has paid admission fee of Rs.100/-or as may be stipulated by

the Board of Directors and paid at least value of HUNDRED shares of the bank.

ACTIVE MEMBERRights & Duties of Member

New Bye-Law• Attend at least one AGM, once in preceding consecutive FIVE years• Utilize minimum one service of bank as per bye law no.15• Minimum holding of Share Capital: Rs.2,000/- and• Minimum Deposit require : Rs.20,000/- or Loan of Rs. 50,000/-• Bank will inform non-active member within 30 days• Voting right – Only Active Member shall have one vote• KYC to members. Bank will issue one time free Identity Card

Recommendation • As per New Bye Law

New clauses

New Bye-Law• Withdrawal & resignation. – member can not apply again for next ONE

year.• Cl. No.23 - Expulsion of member – in General body by ¾ present & voting• On approval from registrar he cease to be member and can not be

readmitted for next ONE years

Recommendation • As per New Bye Law

GENERAL BODY

Existing provisionShall be held on or before 14 August each year

New Bye-Law• shall be held before SIX month

from closure of F.Y.• i.e. 30th September

Recommendation As per new bye law

SPECIAL GENERAL BODY

Existing provisionSpecial General Meeting must be conveyed within one month of the receipt of requisition

New Bye-LawSpecial General Meeting may be called by giving not less than 7 days prior notice in writing to all the members of the Bank within one month.

Recommendation As per new bye law

QUORUM/ MINU TES FOR AGM / SGM

Existing provision30 Members or one fifth of the total number of members whichever is lessMinutes of the General Meeting shall be recorded…..within three months from the date of AGM`

New Bye-Lawone fifth of the total number of members or 300 members whichever is less

Minutes of the proceedings of the General Body Meeting shall be entered in a minutes book within thirty days

Recommendation As per new bye law

DIRECTORSExisting provision• General Category : 11• SC/ST : 01• OBC : 01• NT : 01• Women : 02• Weaker Section : 01• Expert Directors : 02• Staff Representative: 02

• Total : 21

New Bye-LawGeneral Category : 07SC/ST : 01OBC : 01NT : 01Women : 02Expert Directors : 02Functional Dir. : 01 (CEO)

Total : 15

Recommendation General Category : 12SC/ST : 01OBC : 01NT : 01Women : 02Functional Dir. : 01 (CEO)

Total : 17 + 1

New clauses – Eligibility of Director

New Bye-Law No. 40 Active member shall hold minimum shares if Rs.20,000/-

ANDMinimum Deposit of Rs.1,00,000/-

(The person contesting from reserve seat U/S.73B and 73C shall comply with 50% of the criteria required for general category.)

Recommendation • As per New Bye Law

Cl. 41)Chairman / Vice Chairman

Existing provision1. Chairman & Vice Chairman shall be elected for period of ONE year

New Bye-Law1. Chairman & Vice

Chairman shall elected for period of FIVE year

2. Functional Director cant vote for CM/VCM election

3. Chairman Shall have casting vote in Board in case of equal vote

Recommendation 1. 1. Chairman & Vice

Chairman shall elected for period of FIVE years

2. Functional Director cant vote for CM/VCM election

3. Chairman Shall have casting vote in Board in case of equal vote

Cl. 35) QUORUM FOR BOARD

Existing provisionHalf of the Board

New Bye-LawHalf of the BoardFunctional Director not to be counted in election of office bearers

Recommendation As per new bye law

Cl. 55) Appropriation of Profit

Existing provision• 25% To

Statutory Reserve Fund Dividend Subject to maximum Building Fund

New Bye-Lawa) 25% to Statutory Reserve Fundb) 1% to co-op. education fundc) For unforeseen losses by Boardd) Transfer to Dividende) Election expenses equal to 1/5th f) For training of Dir. , Employees,Membersg) Investment fluctuation Reserve h) Upto 10% technology development fundi) Remaining to building fund or any other

fund as decided

Recommendation As per new bye law

New clauses – Share Linking

New Bye-Law No. 56- 5% of unsecured borrowing- 2.5% of secured borrowing- In case of SSI 1% initially and 1.5% in next 2 years- Any case no member hold more than 1/5th shares- Bank may change in case Capital Adequacy more than 12%

Recommendation • As per New Bye Law

Reserve Fund

Existing provision• Invested in Govt.

& Trustee Securities and other approved security or FD with District banks

New Bye-Law• Invested as per Act and Rules• Bank May utilise to purchase

any asset with prior permission of Registrar

Recommendation As per new bye law

New sub-clause – DIVIDEND

New Bye-Law No. 59- e)The Bank shall distribute the maximum dividend of 15% when the CRAR is at minimum level as prescribed by RBI from time to time for the preceding financial year

Recommendation • As per New Bye Law

Auditor

Existing provisionStatutory Auditor shall be appointed by Registrar

New Bye-Law1. Bank shall appoint Statutory Auditor from Panel maintained by Registrar and fix remuneration as well as Internal Auditors at General Body Meeting.2. Qualification & Duties as per RBI guidelines

Recommendation As per new bye law

Amendment to bye-Law

Existing provision1. By a vote of the

majority consisting of not less than two thirds of the members present and voting at a general Meeting.

New Bye-Law1. Notice of clear 14 Days

require to members2. By a vote of the majority

consisting of not less than two thirds of the members present and voting at a general Meeting.

Recommendation As per new bye law

New clausesNew Bye-Law 63. Education courses for members, directors & employee. Sufficient fund shall be provide64. Provident Fund for employees65. Bank shall frame of service rule and amend from time to time66. In case of Winding up shall be according to rules67. The Bank shall devise the procedures through administrative instructions for the association of employees in the management decision making process

Recommendation • As per New Bye Law

Misc.Bank shall be member of 1. District bank2. State Federation of UCB3. State Asso. Of UCB4. Regional / Dist Asso. Of

UCBs5. Maharashtra Sahakari

Sangh / Dist. Co-op. Board

New Bye-LawIn addition to previous6. Indian Institute of Bankers7. Indian Banks Assocaition8. National co-op. union of India9. National Federation of UCBs &

Credit society10. any other Federation /

Associations / Sangh / Board related to the Banking sector.

Recommendation As per new bye law

New clause - defaulter

New Bye-LawMember who is defaulter or surety to defaulter against whom recovery proceedings is initiated under law , obtained decree and notices issued will be disqualified to borrow or stand surety for next THREE years.

Recommendation • As per New Bye Law

The Malad Sahakari Bank Ltd.