62. Funds not to be divided by way of profit.—(1) No part of the funds, other than net profits, of a
multi-State co-operative society shall be divided by way of bonus or dividend or otherwise distributed
among its members.
(2) The net profits of a multi-State co-operative society referred to in sub-section (1) in respect of a
society earning profits shall be calculated by deducting from the gross profit for the year, all interest
accrued and accruing in relation to amounts which are overdue, establishment charges, interest payable on
loans and deposits, audit fees, working expenses including repairs, rent, taxes and depreciation, bonus
payable to employees under the law relating to payment of bonus for the time being in force, and
equalisation fund for such bonus, provision for payment of income-tax and making approved donations
under the Income-tax Act, 1961 (43 of 1961), development rebate, provision for development fund, bad
debt fund, price fluctuation fund, dividend equalisation fund, share capital redemption fund, investment
fluctuation fund, provision for retirement benefits to employees, and after providing for or writing off bad
debts and losses not adjusted against any fund created out of profit:
Provided that such society may add to the net profits for the year interest accrued in the preceding
years, but actually recovered during the year:
Provided further that in the case of such multi-State co-operative societies as do not have share
capital, the surplus of income over expenditure shall not be treated as net profits and such surplus shall be
dealt with in accordance with the bye-laws.
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63. Disposal of net profits.—(1) A multi-State co-operative society shall, out of its net profits in any
year,—
(a) transfer an amount not less than twenty-five per cent. to the reserve fund;
1
[(b) credit annually one per cent. of net profit to co-operative education fund to be maintained by
the Central Government in such manner as may be prescribed and the proceeds from such fund shall
be used for co-operative education and training through the National Co-operative Union of India and
any other agency in such manner as may be determined by the Central Government;]
(c) transfer an amount not less than ten per cent. to a reserve fund for meeting unforeseen losses.
(2) Subject to such conditions as may be prescribed, the balance of the net profits may be utilised for
all or any of the following purposes, namely:—
(a) payment of dividend to the members on their paid-up share capital at a rate not exceeding the
prescribed limit;
(b) constitution of, or contribution to, such special funds including education funds, as may be
specified in the bye-laws;
(c) donation of amounts not exceeding five per cent. of the net profits for any purpose connected
with the development of co-operative movement or charitable purpose as defined in section 2 of the
Charitable Endowments Act, 1890 (6 of 1890);
(d) payment of ex gratia amount to employees of the multi-State co-operative society to the
extent and in the manner specified in the bye-laws.
2
[63A. Establishment of Co-operative Rehabilitation, Reconstruction and Development
Fund. — (1) The Central Government shall establish a Fund, to be called the Co-operative Rehabilitation,
Reconstruction and Development Fund for revival of sick multi-State co-operative societies as referred to
in section 63B and for development purposes in such manner as may be determined by it and there shall
be credited to such Fund annually by multi-State co-operative societies which are in profit for the
preceding three financial years one crore rupees or one per cent. of the net profits of such multi-State cooperative society, whichever is less.
(2) The Central Government shall, by notification, constitute a Committee, consisting of such
members as it may deem fit, to administer the Fund, and maintain separate accounts and other relevant
records in relation to the Fund in such form as may be specified by the Central Government in
consultation with the Comptroller and Auditor-General of India.
(3) The Committee shall spend the money out of the Fund for carrying out the objects for which such
Fund has been established.
63B. Rehabilitation and reconstruction of sick societies.— (1) If, at any time, the Central
Registrar, is of the opinion that a multi-State co-operative society has become sick, he may, by an order,
declare such society as sick co-operative society.
(2) Where a multi-State co-operative society is declared as a sick co-operative society under
sub-section (1), the Central Government or any person or agency authorised by it, may prepare a scheme
for rehabilitation and reconstruction of the society and hand it over to the society for approval of the
general body.
(3) The Central Government may, on the recommendation of the general body and to give effect to
the scheme for rehabilitation and reconstruction referred to in sub-section (2), re-organise the board of
such society with such persons, having experience in the field of co-operation, management, finance,
accountancy and any other area relating to such societies as may be recommended by the general body:
Provided that in respect of a sick multi-State co-operative bank, any scheme for rehabilitation or
reconstruction shall be done with the prior approval of the Reserve Bank.
Explanation.––For the purposes of this section, the expression “sick co-operative society” means a
multi-State co-operative society being a society registered under the provisions of this Act which has at
the end of any financial year accumulated losses equal to or exceeding total of its paid-up capital, free
1. Subs. by Act 11 of 2023, s. 23, for clause (b) (w.e.f. 3-8-2023).
2. Ins. by s. 24, ibid. (w.e.f. 3-8-2023).
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reserves and surpluses and has also suffered cash losses in such financial year and the financial year
immediately preceding such financial year.
63C. Financial assistance to multi-State co-operative societies for development.—(1) The Central
Government may, on an application made by a multi-State co-operative society which has contributed to
the Fund for continuous five preceding financial years, grant such financial assistance as it may consider
appropriate to the society out of the Fund for infrastructural requirement:
Provided that at least fifty per cent. of the total requirement shall be borne by the multi-State
co-operative society and the financial assistance from the Fund shall not exceed more than the fifty per
cent. of such requirement.
(2) The Committee constituted under sub-section (2) of section 63A shall examine and recommend to
the Central Government for providing the financial assistance to the multi-State co-operative society to
such extent and on such terms and conditions as it may consider necessary.]
64. Investment of funds.—A multi-State co-operative society may invest or deposit its funds—
(a) in a co-operative bank, State co-operative bank, co-operative land development bank or
Central co-operative bank; or
1
[(b) in any of the securities issued by the Central Government, State Government, Government
Corporations, Government Companies, Authorities, Public Sector Undertakings or any other
securities ensured by Government guarantees;]
(c) in the shares or securities of any other multi-State co-operative society or any co-operative
society; or
(d) in the shares, securities or assets of a subsidiary institution or any other institution; 2
[in the
same line of business as the multi-State co-operative society] or
3
[(e) with any other scheduled or nationalised bank.
Explanation.––For the purposes of this clause, the expression,—
(i) “scheduled bank” shall have the same meaning as assigned to it in clause (e) of
section 2 of the Reserve Bank of India Act, 1934 (2 of 1934); and
(ii) “nationalised bank” means a corresponding new bank constituted under
sub-section (1) of section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970) and the Banking Companies (Acquisition and Transfer
of Undertakings) Act, 1980 (40 of 1980); or
(f) in such other manner as may be determined by the Central Government.]
65. Restriction on contribution.—No multi-State co-operative society shall make a contribution,
either in money or in kind, whether directly or indirectly, to an institution which has an object of
furtherance of the interest of a political party.
66. Restriction on loans.—(1) A multi-State co-operative society, other than a co-operative bank,
shall not make a loan to a member on the security of his share or on the security of a non-member.
(2) Notwithstanding anything contained in sub-section (1), a multi-State co-operative society may
make a loan to a depositor on the security of his deposit.
67. Restrictions on borrowing.—(1) A multi-State co-operative society may receive deposits,
4
[from
its voting members] raise loans and receive grants from external sources to such extent and under such
conditions as may be specified in the bye-laws:
Provided that the total amount of deposits and loans received during any financial year shall not
exceed 5
[such multiples as may be determined by the Central Government] of the sum of subscribed share
capital and accumulated reserves:
1. Subs. by Act 11 of 2023, s. 25 for clause (b) (w.e.f. 3-8-2023).
2. Ins. by s. 25, ibid. (w.e.f. 3-8-2023).
3. Subs. by 25, ibid., for clause (e) and (f) (w.e.f. 3-8-2023).
4. Ins. by Act 21 of 2019, s. 42 the Second Schedule (w.e.f. 21-2-2019).
5. Subs. by Act 11 of 2023, s. 26 for “ten times” (w.e.f. 3-8-2023).
35
Provided further that while calculating the total sum of subscribed share capital and accumulated
reserves, the accumulated losses shall be deducted.
1
[Explanation.— For the removal of doubts, it is hereby clarified that a multi-State co-operative
society shall not be entitled to receive deposits from persons other than voting members.]
(2) Subject to the provisions of sub-section (1), a multi-State co-operative society may accept funds
or borrow funds for the fulfilment of its objects on such terms and conditions as are mutually contracted
upon.
(3) A multi-State co-operative society may issue non-convertible debentures or other instruments
subject to the provisions of any law for the time being in force to raise resources for the fulfilment of its
objects to the extent of twenty-five per cent. of its paid-up share capital.
68. Restriction on other transactions with non-members.—Save as provided in sections 66 and 67,
the transaction of a multi-State co-operative society with any person other than a member, shall be subject
to such prohibitions and restrictions, if any, as may be specified in the bye-laws.
69. Contributory provident fund.—(1) Subject to the provisions of the Employees’ Provident Fund
and Miscellaneous Provisions Act, 1952 (19 of 1952), a multi-State co-operative society having such
number or class of employees as may be prescribed, may establish a contributory provident fund for the
benefit of its employees to which shall be credited all contributions made by the employees and the
society in accordance with the bye-laws of the society.
(2) Monies standing to the credit of any contributory provident fund established by a multi-State
co-operative society under sub-section (1) shall not—
(a) be used in the business of the society;
(b) form part of the assets of the society;
(c) be liable to attachment or be subject to any other process of any court or other authority