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URBAN CO-OPERATIVE BANK

1. (1) Registration and amendments. -Section 10; Rule 5 (3)-Registration Certificate: evidence of Regn.

2. Section 37; Rule 31-Registered

IMPORTENT SECTIONS OF

MCS ACT, RULES AND BY LAWS

2. Section 37; Rule 31-Registered address of the society. -Change of address also requires amendment of the relevant byelaws.-verify

3. Section 13(1) and (2), Rule 2. –Amend. of byelaws-aprved by Regr.

4. Membership. -Section 22; Rule 19- Qualifications specified in the byelaws for membership of the society should be seen.



society should be seen.5. Limit for share-holding-Section

28.6. Section 29; Rules 23 and 24-

Share Transfers.

7. Member Register-Section 38, Rule 32. -Members Register is required to be maintained in Form



required to be maintained in Form “I ”, accompanying the Rules. List of members in Form “J”

8.Restrictions on Acceptance of deposits and borrowing. -Section 43; Rules 35, 36 and 37,38,39. -Under Rule 35, borrowing limit for all



Under Rule 35, borrowing limit for all types of societies other than those specified in Rules 36 and 37 is ten times the paid-up share capital and accumulated reserve fund and building fund minus accumulated losses.

Central co-operative banks, urban banks, producers’ societies can borrow up to twelve times their paid-up share capital plus reserve fund plus building fund minus accumulated



fund plus building fund minus accumulated losses.

Under Rules 36 the Maharashtra Co-operative Bank can borrow up to fifteen times and land development banks can barrow up to twenty times respectively.(Rule-37)

Restriction on Transactions with Non members-Section 45. – As per Rule-



members-Section 45. – As per Rule-42(6) Societies to transact business with non members with restrictions as prescribed.Rule 45-A: Loan against deposits upto90%.

SHARE linking: As per Rule-43 Every borrower is reqd to hold shares in proportion to the loan applied as per



proportion to the loan applied as per Bye-laws of the Bank/ Societies .Section- 44(1)-shares held cannot offered as security.u/s: 46: soc has a right of set off upon shares & deposits held by a member

Deduction from salary to meet dues of society-Section 49. -Societies formed by salary earners/employees provide in their byelaws requiring their members to



byelaws requiring their members to execute agreements authorizing their employer to deduct from their salaries/wages, due to the society.If not deducted: employer will b responsible

Section 64 of the Act lays down that no part of the funds other than the



part of the funds other than the dividend and bonus equalization funds or the net profits of the society shall be paid by way of bonus or dividend or otherwise distributed among its members.

Section 65, and Rule 49 (A) deals with the manner in which the net profits are to be calculated. Interest overdue, i.e., interest accrued and accruing in accounts, which



accrued and accruing in accounts, which are overdue, cannot be taken to profits. In other words, only interest, which has been actually realized and interest accrued and accruing in accounts in which no part of the principal is overdue, can be taken to profits.

Section 65, and Rule 49 (A): The Rule further lays down that the following deductions shall be made before arriving at the figure of net profits: (i) Establishment charges;



(i) Establishment charges;(ii)Interest payable on loans and deposits;(iii)Audit fees or supervision fees;(iv)Working expenses including repairs;(v)Rent and taxes;(vi)Deprecation;

(vii)Bonus payable to employees under the Payment of Bonus Act, 1965 (viii)Provision for payment of income-tax;(ix)Provision for payment of education fund of



(ix)Provision for payment of education fund of the State Federal society, i.e., Maharashtra State Co-operative Union:(x)Bad Debt Fund;(xi)Dividend Equalization Fund;(xii)Share Capital Redemption Fund;(xiii)Investment Fluctuation Fund;

Provision for retirement benefits to employees;

(xiv) In the case of consumers co-operative stores, provision for payment of purchase rebate to customers (members as well as non-members);(xv) Provision for amounts required for writing off



(xv) Provision for amounts required for writing off bad debts and loss not adjusted against any fund created out of profits.Interest accrued in the preceding years, but actually recovered during the year, i.e., the portion of overdue interest actually recovered, may be added to the net profits.

1. SECTION 65 :-

• No Part of the profits shall be



• No Part of the profits shall be

appropriated except with approval of

AGM & in conformity with Act, Rules

& Byelaws.

• If Bank has created any fund which is

not as per Act , Rules & Bye-laws-it

has to be reported.

2. SECTION 70 :-

Investment of funds –

a) Central co-op. Bank or state co-

CONTRAVENTION OF IMPORTENT

RULES AND BY LAWS

a) Central co-op. Bank or state co-

op Bank

b) Trustee Securities

c) A society having limited

Liabilities & classified in same

classification.

Rule 52 :

(1) Bonus Equalization Fund may be

created.

(2) Used for payment of BONUS


RULES AND BY LAWS

(2) Used for payment of BONUS

(3) Creation of Dividend Equalization

Fund. NOT TO EXCEED 2% OF NET

PROFIT AND CONTRIBUTION

SHOULD STOP ON REACHING 9% OF

PAID UP CAPITAL.

(4) Not to declared more dividend than

recommended by the committee

4. SECTION 66 :-

Contribution to reserve fund- 25%

of net profit. Registrar may permit for

lower approp to Reserve fund but not less

than 10%

5. SECTION 67 :-


RULES AND BY LAWS

5. SECTION 67 :-

• Restriction on Dividend.-not

exceeding 15%. RBI for urban bks,if

not met with prudential norms.

6. SECTION 68 :-

• Contribution to education fund.

7. SECTION 73 (F) (F) :-

•Disqualification of Director.

8. RULE 23 :-


RULES AND BY LAWS

8. RULE 23 :-

• If a person has ceased to be a member

of society them shares shall be return

to him or his nominee by making

valuation of shares based on last

audited balance sheet.

9. RULE 65-

Society shall keep the following book

of accounts


RULES AND BY LAWS

1) Member Register

2) Share Register

3) Minute Book of Annual General

Meeting

4) Minute Book of Annual Board

of Directors Meeting

5) Cash book

6) General Ledgers

7) Individual Ledgers

8) Stock Register

9) Property Register


RULES AND BY LAWS

9) Property Register

10 RULE 107(A) –

Traveling Expenses of Directors-

11 SECTION 28 -

Restriction on holding shares -

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