(1) A registered cooperative society shall not give loans- (a) to any person other than a member except with the general or special sanction of the Registrar : Provided that a loan may be given to a- depositor of the cooperative society on the security of his deposits; or
(b) to a member in excess either of the maximum or of the normal credit determined by the co-operative society for that member in accordance with its byelaws: Provided that in assessing normal credit the managing body shall take a full statement as to the member's means of earning;
(c) on the security of moveable property or future moveable property, unless the moveable property is placed with the co-operative society;
(d) on personal security without sureties, unless the borrowing members has unencumbered immoveable property or attachable funded assets sufficient to cover the loan and a full statement of such securities is submitted by the borrower and the truth of the statement is ascertained by the managing body;
(e) on personal security with sureties, unless the borrowing members and his sureties together have unencumbered immoveable property or attachable funded assets sufficient to cover the loan and a full statement of such securities is submitted by the borrower and the truth of the statements is ascertained by the managing body;
(f) on personal security, with or without sureties, unless the loan is for a short period not exceeding the time required to reap the benefit of the loan and in no case exceeding three years.
(2) . Notwithstanding the provisions of clauses (b),(d) and (e) of sub- section (1) above loan may be given on personal security provided that the managing body of the cooperative society is satisfied as to the credit worthiness of the borrower and has taken from him a scheme for the utilisation of the loan and has ascertained the truth of the statements contained in the scheme and the bonafide of the borrowing member.
(3) the resolution of the managing body granting a loan under this section shall contain the names of all assenting members: Provided that if such names are omitted from the proceedings of the meeting, the Chairman and Secretary shall be held jointly and severally responsible for the issue of the loan;
(4) notwithstanding the provisions of clauses (b) to (f) of subsection (1) and sub- section (2) and (3) above, a registered cooperative society may issue a loan on mortgage or valuable security.
(5) no person shall be accepted as a surety for any borrower unless he is also a member of the same registered co-operative society.
(6) A registered co-operative society, the primary object of which is the issue of loans, shall open a separate accounting or finance or banking branch in accordance with its bye-laws and frame rules for the conduct of business in such branch before it issues any loans and such rules shall first be approved by the Registrar.
(b) to a member in excess either of the maximum or of the normal credit determined by the co-operative society for that member in accordance with its byelaws: Provided that in assessing normal credit the managing body shall take a full statement as to the member's means of earning;
(c) on the security of moveable property or future moveable property, unless the moveable property is placed with the co-operative society;
(d) on personal security without sureties, unless the borrowing members has unencumbered immoveable property or attachable funded assets sufficient to cover the loan and a full statement of such securities is submitted by the borrower and the truth of the statement is ascertained by the managing body;
(e) on personal security with sureties, unless the borrowing members and his sureties together have unencumbered immoveable property or attachable funded assets sufficient to cover the loan and a full statement of such securities is submitted by the borrower and the truth of the statements is ascertained by the managing body;
(f) on personal security, with or without sureties, unless the loan is for a short period not exceeding the time required to reap the benefit of the loan and in no case exceeding three years.
(2) . Notwithstanding the provisions of clauses (b),(d) and (e) of sub- section (1) above loan may be given on personal security provided that the managing body of the cooperative society is satisfied as to the credit worthiness of the borrower and has taken from him a scheme for the utilisation of the loan and has ascertained the truth of the statements contained in the scheme and the bonafide of the borrowing member.
(3) the resolution of the managing body granting a loan under this section shall contain the names of all assenting members: Provided that if such names are omitted from the proceedings of the meeting, the Chairman and Secretary shall be held jointly and severally responsible for the issue of the loan;
(4) notwithstanding the provisions of clauses (b) to (f) of subsection (1) and sub- section (2) and (3) above, a registered cooperative society may issue a loan on mortgage or valuable security.
(5) no person shall be accepted as a surety for any borrower unless he is also a member of the same registered co-operative society.
(6) A registered co-operative society, the primary object of which is the issue of loans, shall open a separate accounting or finance or banking branch in accordance with its bye-laws and frame rules for the conduct of business in such branch before it issues any loans and such rules shall first be approved by the Registrar.
India Code, Government of India. Text fetched 10 Oct 2026. Check the linked official text and subsequent notifications when applying a provision.