Co Operative Cedit Societies

#1
Dear Fellow Members,
1. Can you give me info on how to form a co operative credit societies and the formalties required to fulfilled?

2. Can you give me any link on internet for above information.

3.Many co op soc are offering an intrest rate of 10 % p.a .( 1 year FD ). How safe is it to park funds with co op credit soc? please comment.
 
#2
HI trader31339

In India, laws relating to formation and governance of co operative socities varies from one state to another. What I mean to say is that there is seperate legislation for formation and givernance of co operative socities in each State. Without knowing in which State, you are intending to form a co operative society, it will be very difficult to give proper advice. As the rules varies from one State to another, it is better you consult a qualified lawyer or charted accountant in the State where you are intending to form Co operative Society.

I am sorry. I have not searched the internet for information in this regard. Try your luck by googling.

Regarding the safety for the funds parked with co operative society - Kindly note that it is riskier than investing in a Bank. You must note that higher rate of interest is offered because risk is also higher. This is because, co operative societies are not inspected by RBI. Please note I am referring to co operative socities NOT co operative Banks. Further, its governing board is elected by its members, that is usually having political considerations. So advancing loans will also be on the same consideration and many times there may not be sufficient assets to recover these defaulted loans. The additional handicap is that these co operative socities are very very local in nature and too small to withstand a reasonably big bad debt or a string of bad debts. If the society goes bankrupt, you can and you have to forget money invested therein. Because, usually politicians misuse them and it is next to impossible to recover loans from them. Many of these co operative socities do not have any tangible assets (such as land and buildings or other encashable assets) and therefore recovering your deposit, in case of co operative society going bankrupt, will be in jeopardy. I am not discouraging you, but these are my personal experiences with regard to the co operative socities in my area. These views may hold good in other parts of India too. Therefore, think many times and do good research about the financial health of the co operative society you are going to invest.

If any member has got dissenting opinion or additional information, kindly post here.
 
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#3
Thanks munchikana.
What are the rules for forming a co op society in mumbai. any idea?

Munchikana, there are many co op societies here in mumbai who are having more than 20 branches and good financials, though i m not smart in reading a/c books. They are offering me 10-11% intrest so thought of considering them.

Munchikana, though these org are not inspected by RBI but then there shold be someone who must be inspecting them? ( in maharashtra who? )

Ok by the time see this offer and pls post ur expert comment.

http://www.dattaseva.com/SavingSchemes.htm#SS02
http://www.dattaseva.com
 
#4
Thanks munchikana.
What are the rules for forming a co op society in mumbai. any idea?

Munchikana, there are many co op societies here in mumbai who are having more than 20 branches and good financials, though i m not smart in reading a/c books. They are offering me 10-11% intrest so thought of considering them.

Munchikana, though these org are not inspected by RBI but then there shold be someone who must be inspecting them? ( in maharashtra who? )

Ok by the time see this offer and pls post ur expert comment.

http://www.dattaseva.com/SavingSchemes.htm#SS02
http://www.dattaseva.com
Hi Trader 31339,

In each State, there is an exclusive State Government Department for supervising and monitoring the activity of a co operative society. As I donot belong to Maharashtra, and as I have not studied the relavant legislations governing the co operative societies in Maharashtra, I may not be able to give you an expert advice on this. Further, I donot know the name of this state government department, which supervises co operative societies in Maharashtra. Please note, while forming a co operative society, you have to frame its bye laws also, which invariably means job of a professional. My sincere advice to you is to approach a good lawyer in Bombay. He will help you.

As I opined earlier, co operative societies are influenced by politicians. Who is ultimately governing these supervisory government departments? Politicians themselves. So now you know how effective this supervisory role of the government department may be. There are rules which mandates that the audited accounts of every co operative society must be presented to this government department. However, "Chalta Hai" attitude is common. To compound problem further, there are umpteen number of co operative societies in every state and many of these departments are understaffed and those staff who occupy the posts there may not have much clue about accounting standards and accounting practices. Many of our auditors are experts in presenting window dressed accounts. Therefore, if something fishy is going underneath, it may not be noticed at all until it is very very late.

As I said earlier, in case of banks, RBI does a strict supervision uninfluenced by politicians. If there is any symptom of ill health, RBI takes prompt action to safeguard interests of small depositors. Further, in case of a Bank going bankrupt, there is insurance of Rs. 100000/- (Rupees One Lakh Only) per depositor. Many of us may not know this fact. Please remember safety first, return next. I think some good private sector banks are offering 8 to 9% p.a. interest on deposits. Senior citizens earn more, provided they give their age proof.

I will require some time for studying the websites mentioned by you. May be I will revert back after this weekend, provided these websites give some worthwhile information (I mean something beyond some false and glorified claims). Sorry for keeping you on wait. Kindly bear with me
Munchikana
 
#5
O. K. especially for you, I have made a quick tour of the website mentioned by you. As suspected, it contains full of pompous and adaucious claims and little information.

1. First and foremost, I do not know either the directors and/or of the co operative society found in the web site. I am hearing about them for the first time.

2. As suspected, no annual report of the last financial year. The various so called details about its financial is highly insufficient to draw any conclusion with regard to the said co op. society.

3. It says it has got A Grade certificate from its auditor. But it conveniently omits to mention his name. Why it is shy to mention even the name of its auditor?

4. It boasts of assets such as bulbs, fans, airconditioners, computers etc. Kindly note that these "assets" will not fetch any meaningful amount in the event of distress sale to repay the depositors (in case the co op. society goes bankrupt). Interestingly, it does mention as to whether it owns any land and building that is of substantial worth.

5. If one is to ask the directors of the society as to whether they have invested their personal funds in the deposit schemes of the said society, I guess (I repeat, I am only guessing), the answer will be in the negative.

6. A quick glance of the website reveals that the co operative society is mainly in the business of accepting deposits and lending money. I have not studied it in detail, but my doubt is, if the activities of the society is within the perview of the definition of "banking" as given in the Banking Regulation Act, then a licence from the RBI is required. In the absence of it, the society may be carrying on illegal banking business. For the time being do not take this final point granted. I am yet to study the operations of the co op. society vis - a - vis provisions of Banking Regulation Act.

Now you may ask one valid question. Why I am so negative in thinking? The answer is simple. After seeing so many cheats and studying their modus operandi very closely (that is a part of my profession), I have lost faith in almost everything and almost every system. Hard learned experience over all these years taught me that even if I suspect (forget about smelling the rot) some foulplay, I stay away from it. I advice the same thing you and every one in this forum.
 
#8
muchikana,
ur post are always to the point and the support u give is OFFICIAL the true one that any one needs.
so out of cuiosity i asked
 
#9
muchikana,
ur post are always to the point and the support u give is OFFICIAL the true one that any one needs.
so out of cuiosity i asked
I do not know what do you intend to convey by the word OFFICIAL. I am just an ordinary member (rather I should say, I am proud to be a member) of Traderji community. I am not a paid worker of Traderji and I am not one of those persons who are running this website. I am just another ordinary Indian citizen, whom you may not even be able recognise in a group. But what is most important is that I am extremely happy and proud to say that I am an Indian citizen.

I have been trading in the market since last about 14 to 15 years. But until I joined Traderji, I did not have a clue about trading. Only on going through the various informative posts of learned seniors of Traderji, I learned so many things, which I ought to have known a lot earlier. After joining traderji, I became aware many of my foolishness and I became aware of my ignorance. What fascinated me and what caught me is the motto of this elite group. Learn from one another and share whatever one knows with other members. Many learned seniors of this Forum have truly kept up and lived up to the motto of this forum. So keeping in line with the true tredition of this forum, I am sharing whatever a little I know with the other persons of this group who are in need of that information.

One more point. There is no end to this process of learning. The more your hunger for knowledge becomes, better trader you will be.

Some of the learned seniors have disclosed their identity (like Pankaj, Murthy MSR) and some of them (like Saint, VV Vonteru, Sowmya etc.) have not. It is immeterial whether we know their personal identity or not. Myself and yourself have also not disclosed our personal identities in this forum. What is more important is to continue the true tradition of this forum, i.e. learning and sharing.

I am very glad to hear that the information supplied by me has really helped you. As repeatedly posted by me in this forum, beware of cheats and criminals existing in this world and stay away from them. One need not cheat or defraud another to survive or to make money. It really never helps anybody's cause. Almighty helps all those who honestly and truthfully work. Have faith in Him. One learned member of this forum posted one of the greatest quotes of Mahatma Gandhi just the other day. If one is able to contain greed, and if one is content with what he has, then survival is quite easy.

Last but not least, if you want any more information or if you want any clarification, kindly do not hesitate to post in this forum. If I know anything with regard to your doubts, I will be glad to share it with you and other members of this forum. If I am wrong, any member of this forum can openly say that I am wrong. I have absolutely no ego. I shall always be amenable and liable to be corrected and I shall always stand corrected.

Happy trading.
 

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