mahanagar co op bank (3)
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CHAPTER 1
INTRODUCTION OF CO-OPERATIVE SOCIETY
INTRODUCTION
A co-operative society is a voluntary association of individuals having common needs who join
hands for the achievement of common economic interest. Its aim is to serve the interest of the
poorer sections of society through the principle of self-help and mutual help. The main
objective is to provide support to the members. Nobody joins a cooperative society to earn
profit. People come forward as a group, pool their individual resources, utilise them in the best
possible manner, and derive some common benefit out of it.
A o-operative !ociety can be formed as per the provisions of the o-operative !ocieties Act,
"#"$. At least ten persons above of "% years, having the capacity to enter into a contract with
common economic objectives, li&e farming, weaving, consuming, etc. can form a o-operative
!ociety. ooperative !ocieties Act is a entral Act. 'owever, (ooperative !ocieties) is a !tate
!ubject *+ntry $ of ist II of !eventh !chedule to onstitution, i.e. !tate ist. Though the
Act is still in force, it has been specifically repealed in almost all the !tates and those !tates
have their own ooperative !ocieties Act. Thus, practically, the entral Act is mainly of
academic interest and as per preamble to the Act, the Act is to facilitate formation of
cooperative societies for the promotion of thrift and self-help among agriculturists, artisans and
persons of limited means.
o-operative movement in our country shall not only stay but also grow in times to come. In
spite of the drawbac&s e/perienced in the wor&ing and administration of the co-operative
societies, they have positively contributed to the growth and development of the national
economy. Promotion of thrift, self-help and mutual aid are the fundamental principles of co-
operation. The orientations of commercial organi0ation and co-operative organi0ations are
basically different. In a commercial organi0ation, earning and ma/imi0ing the profits is the sole
motive1 whereas in a co-operative organi0ation profit cannot be the sole motive. The prime
objectives, in addition to the three fundamentals of co-operation mentioned above are to ma&e
available the goods and services in re2uired 2uantity, of better 2uality and at a reasonable price
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to its members. It does not mean that a o-operative !ociety is a charitable organi0ation. It
should, therefore, conduct itself in a businessli&e manner in attaining its objectives efficiently.
3roadly spea&ing there are three sectors operating in the 4nion of India.
PUBLIC SECTOR wherein the !tate i.e. he 4nion of India and the respective !tate 5overnment
underta&e developments projects which are wholly owned by either the entral 5overnment or the
!tate 5overnment. PRIVATE SECTOR which is a sector where private enterprises are permitted in certain fields of
economic activities
CO-OPERATIVE SECTOR which is beautifully blended in between a public sector and the private
sector. It has benefits of both the sectors and disadvantages of neither of them
If object of the society is creation of funds to be lent to its members, all the members must be
residing in the same town, village or group of villages or all members should be of same tribe,
class, caste or occupation, unless 6egistrar otherwise directs. The provision of minimum "7
members or residing in same town8village etc. is not applicable if a registered society is member
of another society. The !tatement of 9bjects and reasons states as follows:
*a ooperative !ociety can be established for purpose of credit, production or distribution.
*b Agricultural credit societies must be with unlimited liability.
*c 4nlimited society is not best form of cooperation for agricultural commodities.
*d 4nlimited society can distribute profits with permission of !tate 5overnment.
MEANING OF CO-OPERATIVE SOCIETY?
A co-operative society is an autonomous association of persons united voluntarily to meet
their common economic, social and cultural needs and aspirations through a jointly-owned
and democratically-controlled enterprise. A co-operative society is another means for forming a legal entity to conduct business
besides forming a company. It pools together human resources in the spirit of self and
mutual help with the object of providing services and support to members. The o-operative Principles under which a co-operative society operates and carries out its
business are :-
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". ;oluntary and open membership.
$. . Promoting education and information technology.
?. o-operation among co-operatives.
@. oncern for the social and ecological environment.
DEFINITION OF CO-OPERATIVE SOCIETY:
The ord Bo-operationB is derived from the atin word Bo-operativeB meaning Cto wor& withC.It has been defined in various ways.
• Sir Horace Pluel!:
Co-operation is self-help rendered effective by organisation. It is better farming, better
business, better livingC.
• I"!er"a!io"al #a$our O%%icer:
CAn association of persons, usually of limited means, who have voluntarily joined together,
to achieve a common economic end, through the formation of a democratically controlled
business organisation, ma&ing e2uitable contributions to the capital re2uired and accepting a
fair share of ris&s and benefits of the underta&ing.C
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CHAPTER &
MISSION'VISION AND O()ECTIVES
VISION:
To ma&e financial services universally available1 to promote poverty alleviation through the
development of a strong, sustainable economic infrastructure using financially sound mar&et
mechanisms
MISSION
in&ing the promotion of sustainable livelihoods with income-generation activities for the community
+nsure that all members follow the democratic way of ma&ing policies and electing representatives
and have an e2ual voice +nsure that all profits are controlled democratically by members and for their benefit
+nhance accessibility of financial services
O()ECTIVES
Inculcate good habits of savings in the cooperative members
Docus on poor, low income and deprived people of the community, especially women who
have no accessibility to any financial institutions Provide opportunities to people to organi0e services collectively by pooling their resources
without depending upon the government or other agencies !ee& active participation of all members without any &ind of social, racial, political, gender
or religious discrimination Provide education, training and information to develop their members as well as their staff
+nhance women)s participation and decision in policy ma&ing-processes at all levels
To support the recognition and inclusion of the community sector as a social partner
In order to articulate the interests of those who e/perience social e/clusion and
Ine2uality.
To promote a global perspective on justice issues and see& to ma&e constructive lin&s
ith the sector and development issues in the (Third orld)
HO* IS A CO-OPERATIVE SOCIETY REGU#ATED?
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• The operation of co-operative societies is subject to control so as to prevent fraud and to
ensure that every member enjoys e2ual rights and benefits *e2uity and e2uality in respect of
the business of the society. There are restrictions on profit disposal and rules to sustain
corporate governance.
• hen a co-operative society is dissolved, the remaining surpluses shall be disposed by the
6egistrar at his discretion for any co-operative purpose.
• The o-operative !ocieties 9rdinance, ap enshrines the o-operative Principles and the
members, to pool human and other
resources together.
• To convene meetings to discuss the organi0ational structure of the proposed co-operative
society *e.g. name, object, common bond of its members, share and business scope.
• To draft co-operative by-laws by referring to the model by-laws obtainable from the
6egistrar and find suitable premises for the society.
• To recruit members *at least "7 persons, each over "% in age.
CHARACTERISTICS OF CO-OPERATIVE SOCIETY
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at a reasonable price by retaining a small margin of profit. It also provides better 2uality
goods to its members and the general public.
Separate Le%al Entity: A o-operative !ociety is registered under the o-operative !ocieties Act. After
registration a society becomes a separate legal entity, with limited liability of its
members.
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!avings culture means, irrespective of how much you earn today, and your needs, you put
something aside for tomorrow, or invest, to ma&e additional income. This, however, is a great
challenge for many people, especially for low income people, whose needs are far more than
what they earn. !ome of them attempt to save, but because the saving is always within their
reach, they find it difficult not to spend the money. et, everybody needs to save and invest to
escape poverty. This is made relatively easy with cooperatives.
As a member of a cooperative, you must contribute regularly, most times monthly. The
contribution is usually deducted from your income, before you even receive it. !o, irrespective
of your needs, you save compulsory. Also, because the money is not within easy reach, you
cannot easily access it to spend.
The second thing you benefit from cooperative as an individual is access to loans either in cash
or in the form of goods. As it is difficult for a camel to pass through the eye of a needle, so it is
for the average individual to get loan from the ban&s in Nigeria. Dor low income earners, it is
even worse, because they don)t have collateral.
+ven for those that can meet the conditions for ban& loans, the loan may not come promptly as
needed. 3ut as a member of a cooperative, you can access loan promptly. our contributions
serve as collateral and fellow contributors are accepted as guarantors. Also, the interest rate and
repayment terms are not crushing as that of the ban&s. This easy access to loans has helped
many people achieve improved welfare.
orporate power is another benefit of cooperative to an individual. There are some things that a
corporate body can achieve easily, which are near impossible for an individual. Dor e/ample, if
an individual buys a parcel of land, the land owners can go bac& and resell the same land to
another person. The individual, especially a low income earner, most of the time loses out
eventually or may have to repurchase the land. 3ut if it was a corporate body, especially a
cooperative, the land owners will not even try such mischief, because from the beginning, a
legal e/pert and government is involved *remember cooperatives are regulated by
government.
Also, with a co-operative, the individual participates in the running of the business of the
group, and in the process, ac2uires &nowledge and e/pertise, which can be beneficial in his
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personal affairs. ompare these benefits to investment in shares or bonds or in a collective
investment scheme. These other investment options do not impact savings culture1 neither do
they provide easy access to loans. The individual also does not have the opportunity to enjoy
corporate power. In fact, he may become a victim of corporate power. And because the
individual does not participate in the management of the companies or his investment, he does
not have opportunity to ac2uire business acumen.
IMPORTANCE OF CO-OPERATIVE SOCIETY
ooperative societies are important in order to help organi0e mutual benefits.
ithin a cooperative structured society in its original tribal form, jobs are allocated
and resources are e/changed among each other and trading is only done with e/ternal
communities. Now cooperative societies are e/tremely important in the savings mar&et and for
mortgage and professional credit within ban&s. ooperative societies are businesses that are set
up by a number of individuals with the intention of gaining mutual benefits from them. These
societies are important to ensure that everyone who has put an investment into them gets a fair
and e2ual return.
CHAPTER +
ADVANTAGES AND DISADVANTAGES
OF CO-OPERATIVE SOCIETY
ADVANTAGES OF CO-OPERATIVE SOCIETY:
The following are the main advantages of co-operatives:
Easy !ormation:The formation of cooperative society is very simple as compared to the formation of
other form of business organi0ation. Any two adults can come together and join their
hand and form a cooperative society.
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The procedure of registration of the society is also very simple and easy. No legal
formalities are re2uired for the formation of cooperative society.
#emorati mana%ement:
The management or co-operative is rest on the elected members from among themselves by forming a committee. +very member gas e2ual say in ma&ing policies of the society.
GThe one man, one voteH principle ensures a democratic management.
Open membership:The membership of co-operative societies is open to each and every person. Anybody
wishing to enjoy the fruits of a co-operative can join it. Nobody is barred from joining
societies on the basis of economic position, caste, colour or creed. A person can enrolled
as a member any time he8she li&es by contributing the minimum capital. 'e8she can also
withdraw the membership whenever he does not li&e to continue as a member.
Ser&ie motto:The cooperative societies are formed not for profits but for providing service. The
societies try to promote the interests of the members. A feeling of co-operation is created
among members.
Eonomial Operation:The operation carried out by the cooperative society is economical due to the elimination
of middlemen. The societies purchase goods directly from producers and sell them to the
members at cheap at rates. The services of the middlemen are provided by the members
at cheaper rate.
Lo' mana%ement osts:The management of a co-operative society is in the hands of persons elected by the
shareholders. Fembers ta&e active interests in the wor&ing of the society. Thus, the
recurring and non-recurring costs are low.
Sharin% o! surplus:The societies sell goods to its members on a nominal profit to cover up administrative
costs. The surplus earned by the society is spent on the basis of cooperative Act.
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After meeting the e/penses, some portion of the surplus spent for welfare of the
members, some portion &ept as reserve and balance is distributed among the members.
Che( on business:
The co-operative are stared with service motive while all other forms of business arelaunched with a profit motive. hen businessmen try to e/ploit consumers by increasing
prices of their goods, co-operatives supply commodities at reasonable prices.
The co-operatives provide a chec& on the business of the other forms of enterprises.
9ther traders will have to reduce their prices when co-operatives are supplying these
goods at lower prices. onsumers are not at the mercy of selfish businessmen.
Limite) liability:The liability of individual members is limited to the e/tent of shares purchased capital
contributed by him. Thus members can enjoy the benefits of limited liability. This ma&es
them free from the tear of utili0ation of their private property, in case of financial crunch
to the society.
DISADVANTAGES OF COOPERATIVE SOCIETY
Dollowing are the disadvantages of cooperative societies:
La( o! Capital 5enerally the members of cooperative societies are related to poor group and they
cannotprovide the capital on large scale. +/ternal financial resources are also limited. !o,
cooperative society faces the shortage of capital, which isa handicap to their developmen.
Untraine) Super&isionThe government has sufficient control over the movement of this societies.Thesesocieties
cannot prosper because the staff appointed for supervision is mostly untrained.
#e!eti&e Or%ani*ationThe organi0ations of cooperative societies are defective and these cannot operate efficien
tly to fulfil their objectives.
Illiterate an) I%norant In our country, the villagers are generally illiterate and ignorant. !o, they are not
Damiliar with the basic concept of the cooperative societies.
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La( o! E+perieneThe members of societies have less e/perience of business.
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.o&ernment Control The cooperative department of the provincial government supervises the wor& of all,coop
erative societies. The business ofa society is not free li&e other forms of business, so it
cannot earn ma/imum profit.
TYPES OF CO-OPERATIVES SOCIETY:
Although all types of cooperative societies wor& on the same principle, they differ with
6egard to the nature of activities they perform. Dollowings are different types of
o-operative societies that e/ist in our country
/ousin% Cooperati&e:
A housing cooperative is a legal mechanism for ownership of housing where residents either
own shares reflecting their e2uity in the co-operativeBs real estate, or have membership and
occupancy rights in a not-for-profit co-operative and they underwrite their housing through
paying subscriptions or rent.
Buil)in% Cooperati&e:
Fembers of a building cooperative *in 3ritain &nown as a self-build housing co-operative pool
resources to build housing, normally using a high proportion of their own labour. hen the
building is finished, each member is the sole owner of a homestead, and the cooperative may be
dissolved.
Retailers0 Cooperati&e:
A retailersB cooperative *&nown as a secondary or mar&eting co-operative in some countries is
an organi0ation which employs economies of scale on behalf of its members to get discounts
from manufacturers and to pool mar&eting. It is common for locally-owned grocery stores,
hardware stores and pharmacies. In this case the members of the cooperative are businesses
rather than individuals.
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Utility Cooperati&e:
A utility cooperative is a public utility that is owned by its customers. It is a type of consumersB
cooperative. In the 4!, many such cooperatives were formed to provide rural electrical and
telephone service.
1or(er Cooperati&e:
A wor&er cooperative or producer cooperative is a cooperative that is owned and democratically
controlled by its Cwor&er-ownersC. There are no outside owners in a CpureC wor&ersB cooperative,
only the wor&ers own shares of the business, though hybrid forms in which consumers,
community members or capitalist investors also own some shares are not uncommon.
Fembership is not compulsory for employees, but generally only employees can becomemembers. 'owever, in India there is a form of wor&ersB cooperative which insists on compulsory
membership for all employees and compulsory employment for all members. That is the form of
the Indian offee 'ouses. This system was advocated by the Indian communist leader A. J.
5opalan.
Consumers0 Cooperati&e:
A consumersB cooperative is a business owned by its customers. +mployees can also generally
become members. Fembers vote on major decisions, and elect the board of directors from
amongst their own number. A well &nown e/ample in the 4nited !tates is the 6+I *6ecreational
+2uipment Incorporated co-op, and in anada: Fountain +2uipment o-op.
The worldBs largest consumersB cooperative is the o-operative 5roup in the 4nited Jingdom,
which offers a variety of retail and financial services. The 4J also has a number of autonomous
consumersB cooperative societies, such as the +ast of +ngland o-operative !ociety and mid
counties o-operative..
A%riultural Cooperati&e:
Agricultural cooperatives are widespread in rural areas.
In the 4nited !tates, there are both mar&eting and supply cooperatives. Agricultural mar&eting
cooperatives, some of which are government-sponsored, promote and may actually distribute
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specific commodities. There are also agricultural supply cooperatives, which provide inputs into
the agricultural process.
In +urope, there are strong agricultural 8 agribusiness cooperatives, and agricultural cooperative
ban&s. Fost emerging countries are developing agricultural cooperatives.
Co-Operati&e Cre)it Soiety:
These societies are formed to provide financial support to the members. The society accepts
deposits from members and grants them loans at reasonable rates of interest in times of need.
;illage !ervice o-operative !ociety and 4rban ooperative 3an&s are e/amples of co-
operative credit society.
FORMAT OF TRADING AND PROFIT , #OSS ACCOUNT
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3alance !heet As on "st Farch $7""
#ia$ili!ie A.ou"! A.ou"! Ae! A.ou"! A.ou"!
I. !hare apital I. ash And 3an&
3alances
Issued K Paid up ash In hand
II. 6eserve Dund And 9ther Dunds ban& balance
6eserve Dund II. Investment
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To!al To!al
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CHAPTER /
MAHANAGAR CO-OPERATIVE (AN0 #TD
COMPANY PROFI#E:
This 3an& was established by the people from the Ahmednagar
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should be. It is secured (A) grade classification for all the years from the beginning. 6esultantly
the 6eserve 3an& of India awarded scheduled status to the 3an& on 7th Manuary "##%. This
also boosted the confidence of our members, account holders and depositors of the 3an&.
At the helm of the 3an& affairs, the ban& has been consistently fortunate to have a gala/y of
illustrious men. These erudite men with e/cellent academic 2ualifications on the 3oard of
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CAPITA# AND #IA(I#ITIES Sc2e3uleA a! A a!
+1-Mar-1+ +1-Mar-1&
!'A6+ APITA " ?,@? >,$%
6+!+6;+ D4N< , 9T'+6 D4N@ ?,"==
P69DIT K 9!! A94NT " -
@$ ,$>,??
39669IN5! ",## -
P69;I!I9N D96 INT+6+!T APITAI!+< 9N NPA "$= %%
9;+6
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e +1-Mar-1+ +1-Mar-1&
A!' AN< 3ANJ 3AAN+! > >=,@$7 ?,#"$
F9N+ AT A K !'96T N9TI+ - ,>%
IN;+!TF+NT! ? #@,@@" %=,=@%
A ",#?,"$=
INT+6+!T 6++I;A3+
a on Investments and !taff loans % =,$"# ,==7
b on Non-Performing Advances =,7#$ ,=$
3I! 6++I;A3+ "@ ?
3+IN5 3I! D96 9+TI9N
*As per ontra
DIL+< A!!+T! # "%,@$" "@,?@
9T'+6 A!!+T! "7 ,7?" $,%7#
> @
*6efer !chedule ", Note no. "=
!+TT+F+NT
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CHAPTER 4
SO#VED PRACTICA# PRO(#EMS
I##USTRATION:
Drom the following trial balance of apna consumers co-operative society ltd as on "st
march,$7"".Prepare the trading , profit and loss account for the year ended "st march $7"" and
balance sheet as on that date in the prescribed (N) Dorm. After considering the adjustments
given thereafter:
Trial balance as n "-7-$7""
Par!icular De$i! Cre3i!
2are ca5i!al ?77
reer6e %u"3 ?777
Cre3i!or =777
P , # A7c 1-/-&811 "@?77
O5e"i"9 !oc #$77
Fur"i!ure "$=77
Co"!ai"er De5oi!e $77
Salarie 7777
De$!or ?777
Co..iio" %%77
Re"! a"3 Tae ?777
Po!a9e a"3
Tele52o"e %77
Tra6elli"9 E5e"e "%77
Pri"!i"9 a"3
S!a!io"er; "=77
A3.iio" %ee $77
Purc2ae
?=77
7
Frei92! "$777
*a9e =777I"6e!.e"! ?7777
Sale
@?$77
7
Ca2 i" 2a"3 ?77
(a" $ala"ce =777
De6elo5.e"! Fu"3 %77
TOTA#
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8 8
A3=u!.e"!:
1>Cloi"9 !oc o" +1! .arc2'&811 a R//888
&>De5recia!io" o" %ur"i!ure @18 5a
+>I"!ere! accrue3 o" i"6e!.e"! R&888
/>Re"! a ou!!a"3i"9 R/88 a"3 Co..iio" 5a;a$le a R&888
4>Salar; a 5ai3 i" a36a"ce o% Ri! i 5ro5oe3 !o !ra"%er !o
$uil3i"9 Fu"3 R1&888
De6elo5.e"! Fu"3R&888
Reer6e Fu"3 &4 o% curre"! ;ear "e! 5ro%i!
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Solu!io":-
24
Apna Consumers Co-operative Stores Ltd.
Tradin ! "ro#t and Loss A$% &or t'e (ear ended 31-03-2011
)r Cr.
Par!icular A.ou"! A.ou"! Par!icular A.ou"! A.ou"!To opening !toc& #$777 3y !ales @?$777
To Purchases ?=777 3y losing !toc& ==777
To Dreight "$777
To ages =777
To 5ross Profit c8d ""?%77
%7?777 %7?777
To !alaries 7777 3y 5ross Profit ""?%77
ess: Prepaid %77 $#$773y Interest Accrude onInvestment $777
To 6ent and Ta/es ?777 3y 9ther Income $77
Add:9utstanding =77 ?=77 Admission Dees $77
To Postage %77
To
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3alance !heet As on "st Farch $7""
#ia$ili!ie A.ou"! A.ou"! Ae! A.ou"! A.ou"!
I. !hare apitalI. ash And 3an&3alances
Issued K Paid up ?77 ash In hand ?77II. 6eserve Dund And 9ther
Dunds ban& balance =777
6eserve Dund ?777 II. Investment ?7777
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No!e:-
No Actual appropriation out of current year)s profit can be made without the approval of the
general body. The above Femorandum profit and loss a8c shows only the GproposedH
appropriations.
CHAPTER B
26
*emorandum "ro#t And Loss Appropriation A%%ount
Par!icular A.ou"! A.ou"! Par!icular A.ou"! A.ou"!
To 3uilding und "$777 3y 3alance b8d "@?77
To of ?@?7 "?%=7To 3alanc c8d >="$7
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Su99e!io"' Reco..e"3a!io" a"3 Fi"3i"9
ooperative !ociety is one of the argest sector Provides nearly %77 million. India is
+mployees more employee than to any other country in the world.
3eing Agriculture based India)s most population is situated in rural areas nearly $8 of total. !o
this gives clear indication of scope of cooperative society also +mployment opportunities in
this area.
Fuch can be done to improve efficiency in cooperative society with proper management
implementation and 5overnment policies. The orporate culture will also bring sustainable
efficiency and thereby cooperatives can compete with strong private players.
There are a number of agricultural commodities li&e rice, sugar, fruits, vegetables1 spices etc.
that have strong competitive advantage in e/port mar&ets. Agricultural cooperatives can ta&e
this advantage in foreign mar&et
All co-operative societies should ma&e provision for the education of their members, officers,
and employees and of the general public, in the principles and techni2ues of o- operation,
both economic and democratic. To these we have though it important to add a principle of
growth by mutual co-operation among co-operative.
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