Adarsh Cooperative Credit Society - Long Term Loan Policy

Arpit Gupta, Roll No. 860B.B.A., LL.B. (Hons.), Semester VINational Law University, Jodhpur

INTRODUCTION

Established under the Multi-State Cooperative Societies Act, 2002

Began operations in 1999; granted the status of a multi-state cooperative in 2009.

Registered Office – District Sirohi, Rajasthan Corporate Office – Udaipur, Rajasthan

LOANS AND ADVANCES

EXCERPT FROM BALANCE SHEET (AS ON MARCH 31, 2013)

LOANS AND ADVANCESAs per the Balance Sheet as on Mar. 31, 2013, the value of ‘long term loans’ is Rs. 3,42,69,851.36, out of a total of approx. Rs. 545 croresHence, long term loans are not as popular as medium term and short term loans

BYE-LAWSClause 22 – ‘Capital & Funds’Includes ‘Loans and Deposits’http://www.adarshcredit.in/English/ByeLaws (see page 19)

BYE LAWS•Clause 46 – ‘Loans and Advances’•2 categories: 1.Unsecured Loans – clean overdrafts, loans against 1 or 2 personal sureties, purchase/discount of clean bills/cheques2.Secured Loans – can be against various types of securities

TYPES OF ‘SECURITIES’Personal securityCollateral security of movable/immovable propertyAny type of ‘dwelling’ – industrial, mercantile, agricultural, plot of land etc.Pledge of govt., trustee securities, shares of approved companies, debentures and FDsInsurance policiesWarehouse receiptsGold and silver ornaments

DEFINITION OF ‘LONG TERM LOAN’•Clause 46 (2) of Bye-Laws•3 types of loans (in terms of lending period):1.Long term loans - > 5 years2.Medium term loans – 15 months-5 years3.Short term loans – up to 15 months

SHAREHOLDING REQUIREMENTS FOR LOANS

Clause 47Unsecured & secured loans – 5% of the Society’s sharesCannot exceed 1/5th of the total shareholding capacity

ADARSH HOME LOANFor purchasing house/flat or a plot and construction thereonMaximum repayment period: 240 monthsLoan amount = 75% of the agreement value

ORIncome criteria, whichever is lower

Income criteria = Net income/salary * repayment period * 0.33

TYPES OF LONG-TERM LOANS

ADARSH HOME LOAN

Maximum loan amount: Rs. 70 lakhsSecurity: Equitable mortgage/registered mortgage of propertyImportant documents to be provided (Address proof, Identity proof, salary details etc)

ADARSH VYAPAR LOANFor SMEs‘To provide security based finance with reduced paperwork and simplified procedure’Both traders and service providersBorrowing limit: 5 lakhs and above for cash and term loan up to Rs. 10 lakhsSECURITYCash credit hypothecation of stock/book debts (Primary)

ADARSH VYAPAR LOANTERM LOAN SECURITYHypothecation of plant and machinery purchased out of the loanREPAYMENTFor cash credit: Yearly reviewFor term loans: 60 months

ADARSH VYAPAR LOANIMPORTANT DOCUMENTSLast 3 years audited Balance SheetLast 3 years income tax returnsList of creditorsAttested xerox copy of ration card/PAN card/electricity bill/telephone billStock and book debt statements for last month

ADARSH PERSONAL LOANMultipurpose loan – finance for medical expenses, purchase of consumer durables, travel expenses, repayment of high cost loansMaximum amount: Rs. 2 lakhsRepayment period: Up to 60 monthsRate of interest: 6% p.a.ELIGIBILITY:10 times of Net Pay, subject to take home salary of Rs. 7,500/- p.m.

ADARSH PERSONAL LOANSECURITYNo security up to Rs. 50,000Rs. 50,000 – Rs. 2 lakhs – 5 % of the loan amount in the form of FD/LIC Policy etc

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