RULES FOR MEDIUM TERM LOAN FOR EMPLOYEES’ CREDIT SOCIETIES
20.1 Short Title, Application & Commencement
These Rules shall be called "Rules for Lending of Medium Term Loans for Employees' Co-operative Credit Societies” or “MT (ECCS) Rules” of the West Bengal State Co-operative Bank Ltd. (hereinafter referred to as "Bank") and shall apply to such classes of Co-operatives as mentioned hereinafter. These Rules shall apply to financing the appropriate class of Co-operative Societies ordinarily by all the Branches of the Bank.
20.2 Class of Co-operatives to whom the Rules shall apply.
Unless otherwise decided or circulated by the Bank, these Rules shall apply to the following categories of Co-operative Societies (hereinafter referred to as "Society") :
(a) Employees' Co-operative Credit Societies (ECCS') formed with the regular Employees of one or more than one establishment(s) having been set up by the Government of any State/ Union of India or formed/ incorporated by any Statute and having their Registered Offices within the Service Area of the respective Branch/Regional Office of the Bank, subject to conditions governing the eligibility criteria for such Society and its Members as set out hereinafter;
(b) Employees' Co-operative Credit Society (ECCS) formed with the regular Employees of an establishment, not being a Government Establishment, Statutory or autonomous Body, which had been incorporated under any Statute or Law for the time being in force.
Provided that :
(i) Employees' Co-operative Credit Society formed with members of an establishment and having its Registered Office at Kolkata, but borrowing Members employed elsewhere in the State, shall be financed by Kolkata Main Branch of the Bank only, subject to fulfilment of eligibility of the Society to borrow from the Bank for lending to the members ;
20.3 Eligibility to borrow from the Bank
Subject to such other criteria to be fulfilled as may be specified by the Bank from time to time, lending by the Bank to any Society shall be subject to fulfilment of the following conditions jointly and severally by the Society and the intending borrowing member :
(i) The Registered Bye-Laws of the Society shall contain the name of the West Bengal State Cooperative Bank Ltd. as the financing Bank ;
(ii) No Society shall be granted Loan by the Bank for lending to its Member unless the Society has been admitted as a member (“C”-class share-holder ) by the Bank;
(iii) The Society shall not be indebted to any other Bank or Entity or to Establishment by whose employees it has been formed ;
(iv) The financial health of the employer organization employing the members of the Society shall be, in the opinion of the Bank, sound and stable;
(v) The Society must have held its Annual General Meeting (AGM) and Election of Directors as per Law at the material point of time when the loan is applied for and has fixed, in an Annual or Special General Meeting, the Maximum Borrowing Power for the year in which it has applied for loan to the Bank. Such Maximum Borrowing Power must cover its deposit and borrowings from the bank;
(vi) The Society has entered into necessary agreement, duly executed by the members applying for loan, as per Sec.59 of the West Bengal Co-operative Societies Act, 2006 , with the Employee-Member, authorising the Employer/Drawing and Disbursing Officer for recovery of the Loan in instalments as per requisition in writing from the Society from the Monthly Salary and/or other receivables including Terminal Benefit/ Compensation/ Gratuity, etc., as admissible on retirement/resignation/retrenchment/ dismissal of the Employee indebted to the Society, in exclusion of the Provident Fund due to that employee, for liquidation of the outstanding/overdue Loan.
(vii) The Society must have completed its Audit of Accounts in a regular manner and its Accounts shall stand Audited at least up-to the last but one year with reference to the year of Application of the Loan ;
(viii) The Society must have remitted Audit Fee, Contribution to Co-operative Education Fund and invested its Reserve Fund, Bad Debt Fund and such other fund created by the Society, as per law by incorporation in its by-laws;
(ix) There is no financial irregularity in the society and it does not have any record of Fraud, Misappropriation of Fund, or any act not in conformity with the provision of the West Bengal Co-operative Societies Act, 2006 the West Bengal Co-operative Societies Rules, 2011 and the By-Laws of the Society, for which no effective action has been taken by the Board of Directors of the Society ;
(x) The Society has not committed any act that runs counter to the terms and conditions laid down by the Bank in respect of any previous lending to it and it has not opened/ventured to open any bank account with any bank other than this bank without the permission of the competent authority as laid down in the West Bengal Co-op. Rules, 2011.
(xi) The Society must not have enrolled anybody as Member who does not have the qualification of being a member of the Society ;
(xii) The Society must undertake not to expel any loanee member without prior recovery of dues from him in full;
(xiii) The society must not have admitted into its membership any person, who was formerly a member of any similar society in any other establishment, without obtaining a No-Dues Certificate from the latter society and if the prospective new member was a member of any similar society, until the shares held by such member in such other society, are formally transferred there as per the West Bengal Co-operative Societies Act, 1983 and the Rules framed there-under and the membership thereat is terminated ;
(xiv) A Member of an Employees' Co-operative Credit Society shall be eligible for Bank loan through the society if :
(a) he is a regular and confirmed employee of the organization, serving there at least for one year ;
(b) he is borne in a time scale of pay ;
(c) his salary is drawn on monthly basis ;
(d) no disciplinary proceedings is contemplated or pending against him ;
(e) he has got at least 6 months' service left after repayment of the last instalment of the loan taken with reference to the date of disbursement of the loan to him by the Society;
(f) the gross monthly deduction from his monthly salary, including the deduction on account of repayment of the loan prayed for, does not exceed 60%( sixty percent) of his gross monthly salary;
20.4 Maximum Borrowing Limit
(a) For Society
The Society shall be eligible to borrow from the Bank for on-lending to its Members Loan to the extent representing the aggregate of the Loan applied for by its Members as resolved for sanction by the Society in the Meeting of its Board of Directors, subject to a maximum amount limited to the Borrowing Limit fixed in the Annual or Special General Meeting from time to time as reduced by the Loans already outstanding from the Society at any material point of time when the Loan is applied for by the Society to the Bank. In case the Society fails to hold Annual General Meeting for circumstances beyond its control and consequently cannot fix up the Maximum Borrowing Power for a year, due exemption as per provision of the West Bengal Co-operative Societies Act, 2006 has to be obtained from the competent authority and produced to the Bank/Branch of the Bank where the Loan is applied for.
Before disbursement of the loan, the Society should be admitted as a “C” Class Member of the Bank by paying Admission Fee @ Rs.20/- (twenty) only along with at least one “C” Class Share, valued at Rs.500/- each, if not already admitted and such more no. of Shares as may be required to cover 2.5% (two point five per cent) of the loan amount outstanding as on the date of disbursement (after taking into consideration the instant loan case) less the amount of loan outstanding as on the date of such disbursement out of loans issued on or before 31/03/2005.
(b) For Individual Member
A member shall be eligible for MT (ECCS) Loan, for a maximum amount of 20 (twenty) times of the sum of the Basic Pay and Dearness Allowance when the Employer/ Drawing and Disbursing Officer/ Disbursing Authority assures to arrange for remitting recoveries in respect of instalment dues along with interest to the disbursing Branch by way of deduction from the salaries of the employee-members by the Employer/ Drawing and Disbursing Officer/ Disbursing Authority or when such deduction is made from the salaries of the employee-member at the time of disbursement of the salaries from the Branch concerned. In all other cases, the maximum loan eligibility shall remain restricted to 10 (ten) times of the sum of the Basic Pay and Dearness Allowance of the employee-member. This eligibility will be subject to assessment of his repayment capacity for a month, which shall not be taken as more than 60% of his Gross Salary in a month, i.e., 40% (forty per cent) Take-Home Pay criteria is to be followed. However, the maximum amount of loan admissible to an eligible employee shall not exceed Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand) only.
20.5 Authority to sanction Loan
Unless specifically ordered by the Bank, all Loans to the Societies shall be sanctioned by the Board of Directors/ Loan & Recovery Committee/ Regional Loan Committee of the Bank. However, for the sake of expediency, the authority of the Bank may, by any general or special Order issued in this behalf, confer the power to a group or Committee consisting of officers.
20.6 Interest on Loan, Basis of Calculation, Penal Interest, etc.
Unless otherwise directed by the Reserve Bank of India, the interest on any Loan shall be charged from the society at such rate as the Bank may fix up from time to time. The Bank reserves the right to introduce a differential rate-structure of interest depending on the amount and/ or the period of repayment of loan applied for sanction against a single application. The interest shall be charged on monthly rests.
The repayment of a loan by the member shall commence from the month following the month of disbursement of the Loan. The "Due Date" for repayment shall be the same date in subsequent months and shall commence from the following month. The loan shall be deemed to be current if repaid within 7 (seven) days from the “Due Date”.
The society shall be competent to charge interest margin as shall be determined by the bank from time to time.
In the event of failure on the part of the borrowing member to repay the loan to the society and/or such failure on the part of the society to the Bank as per schedule of repayment, penal interest at appropriate rate as may be decided by the Bank, shall be imposed on the defaulted instalment from the month of default till the same is paid.
20.7 Repayment of Loan - Mode & Period
The Loan granted to a Society should be repayable by a Member either directly to the society or by way of deduction from Monthly Salary through Pay Bill. In case of recovery by way of deduction from the Pay, the society shall specifically ensure that Drawing & Disbursing Officer(s) remit the loan instalment recovered, to the society forthwith and by the due date as per the schedule of repayment.
Where the salary is disbursed through any bank, the society has to obtain a standing instruction (SI) from the Employee-Member authorizing the pay-disbursing bank to remit the Loan instalment to the society by debiting his salary account every month till liquidation of the loan.
Unless otherwise directed by the authority of the Bank, all loans sanctioned to any society shall be repayable, within a maximum span of 5 (five) Years in 60 (sixty) equal Monthly Instalments with interest.
The period of repayment of loan by a borrowing member to the society shall be the same as that fixed by the Bank in respect of such member.
20.8 Processing Fees
There shall be no “Processing Fee” payable by the borrowing member/ society to the Bank for sanction of loan under these Rules.
20.9 Eligibility of a Borrower-Member to more than one Loan from the Bank
An indebted non-defaulter member of the society may be granted purpose-specific loans (e.g., Home Loan, Consumer Durable Loan [SYFO], Personal Loan, etc.) under appropriate Rules of the Bank, subject to fulfilment of eligibility of such member as per extant rules relevant to such loan schemes of the Bank. Such loan may be sanctioned to a member either as an individual or through the Employees' Co-operative Credit Society, of which he is a member. In case a member of the society, whether or not he is indebted to the society, prefers to apply for sanction of loan from any other Bank/Financial Institution for any purpose/reason, the information of such borrowings should be given to the society forthwith at the point of applying for such loan. Non-disclosure of such information may render the member disqualified for sanction of loan through the society and in the case of his being indebted to the Bank, may expose him to recall of the entire loan as may be outstanding from him by the Bank/Society.
20.10 Premature Repayment of Loan by the Society or by an indebted Member
An indebted member will have the liberty to make repayment of lump-sum towards repayment of his debt to the society without any demur or favour in the form of rebate on the rate of interest or otherwise. In such case, the society shall also have the liberty to repay the loan to the Bank without any demur or favour in the form of any rebate on the rate of interest or otherwise.
20.11 Application for Loan, Disbursement Procedure & Documentation
The loan to be disbursed to any member shall be applied for by the intending member to the society first by filing in an Application in the prescribed form and the same should be considered by the society in the meeting of its board. A provisional sanction of the loan by the Society shall be resolved, if the intending borrowing member fulfils the conditions determining eligibility to borrow, as per provisions of this Rule. The society shall apply to the Bank for sanction of the loan in the manner applicable for lending of Medium Term Loan by the Bank. The loan proposal shall accompany necessary resolution of the board of the society indicating the loan applied for by each member and testifying fulfilment of conditions of eligibility by such members applying for loan. Such application shall be submitted to the concerned branch of the Bank under whose service area, the society's registered office falls.
The loan application shall be checked by the Supervisor/Accountant/Assistant of the concerned Branch / Service Area as to the correctness of the information incorporated, eligibility of the society to borrow the sum applied for keeping in view its existing level of borrowing/outstanding vis-a-vis the maximum borrowing power fixed in the Annual General Meeting of the society, etc. and arrange for onward transmission of the loan application to the Head Office/concerned Regional Office of the Bank after recording his comments/observations and through the Branch Manager. The loan application shall be finally disposed of by the Investment and Loan Committee/ Regional Loan Committee, under ordinary circumstances, as per this Rule.
Before disbursement of the loan, a Letter of Sanction shall be sent to the society with direction to make the borrowing member(s) aware of the terms of sanction of the loan and the loan shall not be disbursed to the Society until the Society submits a Letter of Acceptance, duly signed by its authorized representatives, to the disbursing branch of the Bank.
The loan will be disbursed, either by crediting the Savings Accounts of the borrower-members of the society held with the Bank Branch against an enabling mandate from the Society, or by crediting the Savings/ Current A/c of the society with the Branch with the Bank’s mandate for issue of Account-payee cheques by the Society for the individual loan amounts in favour of the members, after execution of Agreement Bond, Letter of Continuity, completion of other usual formalities and subject to the recommendation of the Supervisor of the Bank.
The society shall be required to submit to the disbursing Branch of the Bank a "Disbursement Certificate" duly signed by the borrower-Members and authenticated by the Secretary of the Society, within a week from the date of disbursement by the Bank.
20.12 Security/Collateral Security, Surety
The Bank reserves to itself the right to take any collateral security for the loan disbursed under these Rules either by the society or by the borrowing member to the Bank/Society. However, the borrowing member shall be required to furnish minimum two sureties at the time of documentation at the society-level for disbursement of the loan by the society. Such sureties shall be members of the Society concerned.
20.13 Compliance with the Capital Adequacy Norms
The Society shall collect Share equivalent to at least 5% (five per cent) of the loan amount.
20.14 Right to add/alter/delete/modify the Terms of Sanction of Loan by the Bank
The Bank reserves to itself the right to add/alter/delete/modify any of the conditions of sanction of loan if circumstances in the opinion of the Bank, so warrant.
20.15 Power to recall the Loan
(i) The Bank reserves its right to invoke "Banker's General Lien (BGL)" in respect of the Loan sanctioned under these Rules with or without Notice to the society/borrower member, if circumstances so warrant.
(ii) The Bank also reserves to itself the right to recall the entire Loan as may be outstanding or any portion thereof from the Society, if in the opinion of the Bank there are grounds for such recall. Such recall of the Loan may be made if, in the opinion of the Bank:
(a) the Society has diverted the loan amount repaid by any member,
(b) fails to deposit the loan instalments to the Bank regularly as per repayment schedule,
(c) invests or indulges in investment of the loan amount in speculative trade by any borrowing member,
(d) re-lends the loan amount or the money repaid by the borrowing members to other members in whose favour/for whom no Loan has been sanctioned by the Bank,
(e) conceals the material information pertaining to the "Eligibility" of a Member to borrow,
(f) fails to take action against defaulting members,
(g) refuses access to the Books of Accounts for verification by the Bank,
(h) denies information, Demand List of defaulting Members/List of borrowing members,
(i) resorts to borrowing or intending to borrow from any other Bank/Financial Institution and/or allow any indebted/prospective borrower Member to do so without the knowledge of the Bank, contrary to Rule 3(ix) of these Rules, etc.
Provided that no such recall of the loan shall be made without communicating to the society the reasons/circumstances of such recall and offering an opportunity to the society of representing to the Bank on the grounds of recall as may be informed by the Bank.
20.16 Power to sue against any Member for recovery of Loan
The society in whose favour the loan is sanctioned under these Rules shall, ordinarily, take recourses to recovery of outstanding/overdue loans from an indebted defaulter member as per provisions of the West Bengal Co-operative Societies Act, 1983 and the Rules framed thereunder. However, acceptance of the terms and conditions of sanction of the Loan under these Rules shall imply devolution of authority by the society upon the Bank to institute legal action against the society/indebted member, if circumstances so warrant, for recovery of the loan due/overdue without any further consent from the society.
20.17 Repeals & Savings
Orders/ circulars/instructions issued prior to approval of these Rules by the Bank, as far as those are repugnant to these Rules, shall stand repealed with the introduction of these Rules. However, nothing contained hereinabove, shall affect or invalidate the lending already made prior to circulation of these Rules. The resolutions adopted by the Bank in the meetings of its Managing Committee/Board of Directors on individual cases having general applicability, circulars and orders issued by the Bank prior to promulgation of these Rules, as far as those are not inconsistent with the clauses hereinabove, shall be deemed to have been confirmed, validated and maintained by these Rules.
20.18 Dispute and Appeal
Any matter not specifically covered by these Rules shall be referred to the Board of Directors of the Bank for decision. Should there be arising any dispute over interpretation of any of these Rules, the decision of the Board of Directors of the Bank shall be final and binding. Should any dispute be arising on the disbursement/recovery of the loan to/from the society/its member, the same shall be disposed within the scope of the West Bengal Co-operative Societies Act, 1983 and the Rules framed there-under.
20.19 Appraisal and Sanction: All loans of this type shall be appraised by the Branch Manager himself or any official authorized by him with reference to the Loan Manual of the Bank specifically recommended by the Branch Manager/ Manager of the Branch, processed at the Regional / Head Office level and then considered and sanctioned by the appropriate Committee of the Bank duly authorized by the Board of Directors from time to time or by the Board of Directors itself.