Credit Co-operative society

Credit Co-operative society

A Credit Co-operative Society is a group of individuals coming together to promote economic welfare and to promote the requirement of self sufficiency in the society. Such society can be registered through a lawful process, where individuals who have the same motive. Hence in order to form a credit co-operative society, first society registration is important. There are different forms of processes related to credit co-operative society registration. State rules would also govern the management of the credit co-operative societies. Credit Co-operative Societies are governed by the provision of the Multi State Cooperative Societies Act, 2002.

Package inclusions:
  • Procedure to form a credit co-operative society in India
  • Liaising with the concerned regulatory authority for forming this form of society
  • Documents required for forming a cooperative society
  • End to End Support

Credit Co-operative society

Credit Co-operative Society- An Overview

A society which is formed by a group of different types of individuals with a same motive to promote self sufficiency is known as a Co-operative Society. When there are different individuals carrying out such motives, then the society is understood as a Credit Co-operative Society.

Such societies are governed by the provisions of the Multi State Cooperative Societies Act, 2002. This act along with different rules helps to promote the betterment of the society. This would also provide functional autonomy for societies to operate properly. The government in order to promote such requirements passed ‘The Multi State Cooperative Societies Bill’ which received royal assent from both the houses of the parliament before it became a law.

Hence co-operative societies are formed for the betterment of the community. A Credit co-operative society includes providing different forms of credit to its members. This would also include providing a loan and other forms of credit facilities to its members. Hence this type of society is formed as a financial co-operative and under the control of the members.

Usually this type of society is formed to provide reasonable computation of financial products to its members. This would include provisions of loans and interest related to loans. Apart from this, the Credit Co-operative society would also accept deposits from its members.

There are two types of Credit Co-operative Societies:

Types of Credit Co-operative Societies
  • Agriculture Credit Societies

    These forms of societies is found in villages. Such societies would provide loans to local artisans and farmers.

  • Non-Agriculture Credit Societies

    Non-Agriculture Credit Societies are found in Metropolitan and Urban Areas. Such loans are provided to individuals in these areas.

Tier Category of Credit Co-operative Society

There are different tiers related to category for credit co-operative societies. The following are the types of tiers present under Credit Co-operative societies:

Tier Category of Credit Co-operative Society
  • Primary Credit Co-operative Society

    Such societies are present in a particular area. Membership to this society is usually open to all types of individuals.

  • Central Credit Co-operative Society

    Membership in this type of society is limited only to few people. Usually, these would be members of the banking union and other forms of union. Such types of societies are usually formed at a district level.

  • State Credit Co-operative Society

    This type of society is usually involved in accepting deposits from particular class of individuals.

Benefits of Registering a Credit Co-operative society

The following are the benefits of registering this form of Society:

Benefits of Registering a Credit Co-operative society
  • Promotes Self Sufficiency

    By registering this form of entity, the interests related to promoting self sufficiency can be established. This can be achieved as members would be able to avail different forms of loans with less interest rate. In comparison to this, the interest rates offered by a traditional bank would be quite high.

  • Less compliance

    This form of society can be easily formed with less than 10 members. Also to form this society there is only basic registration with the Multi State Cooperative Societies Act, 2002. Hence such societies can be easily established with less compliance and no burden.

  • No Barriers to Membership

    Any individual can be a member of the society. Hence there are no barriers related to membership of this form of society. An individual is not restrained on the basis of a particular requirement to be a member.

  • Limited Liability

    The liability of the credit co-operative society is limited. This means that the members do not have any personal liability for acts which are carried out by the society. Hence by forming this society, the personal assets of an individual can be safeguarded properly.

  • Same Rights

    The constitution of this form of society is based on the members. Hence all the members can take decisions related to their respective rights and liabilities of the society. All members have their rights related to voting on particular matters.

Eligibility Criteria for Forming a Credit Co-operative Society

The following eligibility criterion has to be sufficed for forming a credit co-operative society in India:

Eligibility Criteria for Forming a Credit Co-operative Society
  • Bank Certificate

    The members of the society must have a letter from the bank stating that credit balance is present to satisfy the requirements related to the credit cooperative society.

  • Minimum Number of Members

    There has to be minimum number of members to form this type of society. For a state there has to be minimum of fifty members.

  • Minimum Number of Directors

    The board members or the number of directors have to satisfy the requirements related to a credit cooperative society. Minimum of seven board members should be present. The upper limit on the number of members is 21.

  • Information on the Credit Cooperative Society

    A comprehensive document must be provided regarding the credit cooperative society. In this document, information on ‘how the society helps in social and economic development’ must be provided. Along with this the name of the credit cooperative must also be provided. Along with this, information on the registered office of the credit cooperative must also be provided.

  • Capital requirements

    The members also have to provide information that all the requirements related to pre-registration of the society has been met. This would include the information on the initial capital of the company, number of members and other relevant information related to the credit society.

Procedure for Registering a Credit Co-operative Society

The following procedure has to be considered for registering the credit co-operative society:

  • Go Online

    First and foremost, the applicant has to go online to the following website https://mscs.dac.gov.in/Default.aspx . In the website visit the ‘Forms Tab’ where different forms are available. The applicant can go for the process of offline registration or online registration. For the offline process the applicant has to download ‘Form 1’. This form is downloadable in PDF format.

  • Provide Information

    Such societies can be formed under the Multi-State Cooperative Societies Act, 2002. All the information related to the society must be provided by the members. A formal declaration has to be made by the members that a multi state cooperative society has to be formed. Along with this, information on the following must be provided:

    • Name of the Society

    • Registered office of the society

    • Capital of the Society

    • Number of members of the society

    • All respective certificates

    • Registered Office of the Society

    • Information on the Promoters of the society

  • Submit the Form

    In the next step, the form must be submitted to the ‘The Central Registrar of Cooperative Societies, New Delhi. Along with this, specific documents have to be submitted for forming this type of society.

Online Procedure for registering a Credit Co-operative Society

If the members follow the online procedure for registering a credit co-operative society then the following has to be considered:

  • Go Online

    First and foremost, the applicant has to go online to the following website https://mscs.dac.gov.in/Default.aspx .  After this the applicant has to go the tab, ‘MSCS-MIS’. When going here a drop down menu would appear. The applicant has to go and click on ‘New User Registration’.

  • Provide information

    All the forms with relevant information has to be filled by the applicant. Along with this, information on the MD, Chairman, Vice Chairman and other officers has to be filled. Information related to PAN also must be filled by the applicant.

  • OTP

    After this step is complete; the applicant would receive a One Time Password (OTP). An auto generated mail would be sent to the applicant’s email.

  • Login

    After receiving this, the applicant would have to login and provide the user name and password for registering the Credit Co-operative Society.

Documents required

The following are the documents required for registering a Credit Co-operative Society:

  • Information on the list of members. Such information has to be provided state wise along with information on their date of birth. The registration would only be allowed if there are minimum at least 50 members for each state.
  • Copies of the PAN Card and Aadhaar Card. Such documents have to be attested by the society’s promoter.
  • Information on the operation of the society in different states. These forms of societies are allowed only to operate in maximum of two states. This would only be for a period of two years.
  • Resolution for the appointment of the promoter of the society.
  • Certificate from a nationalised bank stating the formation of the society:

    • Balance present in the account when the application is filed by the society.

    • Solvency Status of the applicants.

    • If the member has taken any form of overdraft facilities in the past three financial years.

    • If overdraft has been excessively used in the past three financial years, then information on when the overdraft facility has crossed the excessive limit.

    • If there are any violations and penalties related to overdraft, then the reasons for the violations must be provided.

  • Financial Statements of the Past Three Financial Years. Such statements are not required, if the cooperative society is older than three years.
  • Information on the society taking steps to take part in democratic decisions.
  • Bye-Laws of the society as attested and presented by the promoter.

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Frequently Asked Questions

Credit societies operate based on an association between different individuals that promote specific social and economic interests.

Societies can be understood as an association of individuals to carry out some objects for some form of common purpose. However, a credit cooperative society is also an association of individuals that promote the interest of the society. This society is form to offer different forms of financial products and less interest rate to its members.

Yes, these forms of societies can collect deposits from its members. There are specific rules which have to be followed by credit cooperative societies.

Such societies are governed by the provisions of the Multi State Cooperative Societies Act, 2002. This act along with different rules helps to promote the betterment of the society.

The minimum number of members required for a credit cooperative society is 50. This must be 50 members from each state to form this type of society.

Yes audited financial statements have to be provided for registration purposes. However, such statements must be for the preceding three years. A society would not require to provide these forms of statements if it is more than three years old.

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