Financing and Fund
Raising by Co-operative
Society.
Co-operative society can raise its funds through
Share Capital from members
 Deposits from members
 Borrowing from DCCBs / SCBs.
 Share Capital from Government.
 Loan from Any other person, institution/
organization
 Debentures from members and any other
persons.

 Society
shall receive deposits & loans only to
such extent and subject to such conditions as
may be specified in byelaws.
 General body of society shall have power to
permit the society to borrow from credit
agency subject to such conditions as may be
stipulated in the resolution of general body.
 Such resolution is valid till the date of next
AGM.
This section is deleted by Act of 1998 with
effect from 15.8.98. Previously a member can
hold shares upto 1/5th of total share capital of
society subject to maximum of Rs. 10,000/ Restriction on Share holding by member of
UCB – upto 1/5th of paid up share capital of that
bank as per RBI guidelines.
 DCC Bank while disbursing loan to PACS and
other societies, can deduct share amount from
the loan sanctioned.

State Co-operative Bank
District Central Co-operative Bank
Primary Agricultural Credit Society
Farmers
NABARD
State Co-operative Bank
S.C.B. / D.C.C.B.
Sugar Factories
Pledge against
Stock of sugar
Hypo C/C against
stock of stores
Spinning Mills
Preseasonal C/C
for meeting preseasonal
expenses like harvesting,
cleaning and maintenance
of factory
Pledge A
Pledge B
For sugarcane for processing
Payment
expenses
Term loan – 1) for correction of new factory
2) for ethanol project
3) Distillery
4) expansion
Spinning Mills
Pledge against
stock of spin
Term loan
1) For errecting
new spinning mill
2) for expansion
For payment of cotton.
Conditions for financing new project and
Clean C/C to Sugar factory :a) It must have positive net worth
b) If net worth is negative, Government
guarantee is required.
LDB provides Long Term finance to
farmers.

Long Term finance to farmers is for
land development, Digging of well, Bore
well etc.

Nabard Refinance to LDB against
Government guarantee

LDB cannot receive deposits from
public as provisions of Banking
Regulation Act are not applicable to

Government funds and
subsidies provisions
for Co-operatives
 Section
41 :- Direct partnership of State
Government in societies :- State
Government may subscribe directly to
the Share capital of society with limited
liability.

In case of CCSE, State Government
shall not hold more than 25% of Share
Capital.
 Section
42 :- Indirect Partnership of State
Government in Societies :- State
Government provide money to the Apex
Society for purchase of Shares in other
societies.
 Section
43 :- Principal State Partnership
Fund :
An apex society which is provided
money as aforesaid shall establish fund
called “Principal State Partnership Fund”

Apex society shall utilize this fund for
directly purchasing shares in other
societies or

For providing money to society to
purchase shares in other societies.
 Section
44 :- Subsidiary State Partnership
Fund.

Central society which is provided
with money by Apex Society from
principal State Partnership Fund shall
establish fund to be called “Subsidiary
State Partnership Fund”

A central society shall utilize this fund
for purchase of shares in primary society.
 Section
45 :- Approval of State
Government for purchase of shares from
principal State Partnership fund or
subsidiary state
 Section 49 :- All money received by apex
society in respect of shares of other co
operatives society purchased from
money in principal State Partnership fund
on redemption of such shares or by way
of dividend, shall be credited to that
fund.
Section 51 :- Principal State Partnership fund and
subsidiary state partnership fund shall not form
part of assets of apex society or central society.
 Section 52 :- State Government may inter into
agreement with apex society setting out terms
and conditions on which it shall provide money
to apex society.
 Apex society may with previous approval of
state government inter into agreement with
central society setting out the terms and
conditions on which it shall provide money to
that society from Principal state partnership
fund.
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

i)
ii)
iii)
Section 53 :- Other forms of State Aid to Cooperatives Societies
State Government may
Give loans to co-operatives societies.
Guarantee repayment of Principal and
payment of interest of debentures issued by
co-operatives societies.
Give financial assistant in any other form
including subsidies to co-operatives societies.
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In every District Central Co-operative Bank,
Government has Share Capital.
Through District Central Co-operative Bank,
Government hold share capital in Primary Agricultural
Credit societies known as “Subsidiary State Partnership
Fund in PACS”
District Central Co-operative Bank receives from
State Government share capital for PACS and pass on to
PACS.
“State Partnership Fund” appears on both side of
Balance Sheet of DCC Banks.
If PACS declares dividend, it pays to DCC Bank
and DCC Bank in turn pays to State Government.
PACS has to credit Share Capital Redemption Fund
This fund is required to be invested
separately.

When Government Share Capital is due for
payment (generally it is for 15 years), it is
required to be paid.

PACS also receive aid from NCDC for
building go-down.

This aid in the form of loan is received
through State Government.

Government also issue unconditional,
irrevocable default guarantee to SCBs and
DCCBs for making finance to erect new factory
and also to provide finance to SSKs having
negative net worth.
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State Government through department of Social
Welfare provides grants to magasvargiya industrial
societies and yantramag societies for setting up of
industry.
In case of draught, if crops are not raised /
destroyed, Government reschedules loans granted to
farmers by PACS.
In 2008, State Government has declared Debt
waiver and debt relief scheme for farmers.
In case of LDB, Government holds share capital.
Government has also issued guarantee for
refinance provided by Nabard to LDB.
As LDB could not repay to Nabard in time,
Government has paid to Nabard when guarantee was
invoked by Nabard.
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When farmers were in difficulty to repay their
loan to LDB, OTS scheme was implemented for
farmers. Loss caused to LDB in OTS was repaid by
Government.
Central Government also grant rebate in
interest to farmers through DCCBs. Rebate is from
1.25% to 1.75% depending upon level of NPA.
State Government also grants additional 1%
rebate to farmers.
Loans upto Rs.1 lakh are granted to farmers
interest free.
State Government has provided Rs.200 crores
interest free loans to credit societies which are
unable to pay its depositors.
Subsidy Scheme
Continuation of S.T. agri loans of to Rs. 3,00,000/at 0% rate of interest.
 M.T. and L.T. agri loans of to Rs. 10,00,000/- at
3% rate of interest.
 Construction of godown by PACS under PPP
model Rs. 5 crores budget provision for 2015-16.
 Rs. 10,000/- crores loans to cover 23 lakh
farmers.
 Rs.
32 crores towards share capital for
registration of one member from each BPL family
as a member of PACS in next 3 years.

Waiver of loan raised for borewell if borewell is
failed in respect of loan disbursed by PCARD
bank in Karnataka.
 Separate
DCC
Bank
for
Haveri
and
Chamrajnagar District.
 Construction of warehouses at 72 places for
storage of agri production of Karnataka framers.
 Market modernization scheme in 25 major
APMC market at outlay of Rs. 50 crores with 25%
grant from Karnataka Government.
 Cold storage units in Hubali, Tumkur and
Dasanapura of Bengluru and need based Silos in
selected APMC.

Scientific analysis laborites in Mysore, Tumkuru,
Hubali and Raichur APMC.
 For Yashwini scheme – Karnataka Government
will spend Rs. 110 Crores.
 Provision of sexed semen tubes at 50% subsidy.
 Short term loans upto Rs. 50,000/- at 0% interest
through Co.operative banks for cattlefeed and
other maintenance expenses.
 Insurance premium subsidy upto 5 cattle to
members of milk production co-operative
society.
.

Blackened subsidy to small and marginal
farmers to established cattle, sheep, goat, pig
and poultry units by availing loan upto Rs. 1.5
lakh from Commercial bank subsidy to be 33%
for SC and ST and 25% subsidy for others.
 90% subsidy to be given for procurement
centres,
cold storage, farm mechanized
implements and processing units in respect of
horticulture.

Agree loans to Farmers at 0% and 1%
WEF
Crop loan up
to Rs. 1 lakh
Crop loan above
Rs. 1 lakh but
upto Rs. 2 lakh
Crop loan above Rs.
1 lakh and 2 lakh but
upto Rs. 3 lakh
1 April 2012
0%
-
1%
1 April 2013
0%
1%
1%
1 April 2014
0%
0%
0%
1 April 2015
0%
0%
0%
23.50 lakh farmers in the State will gate loan of
Rs. 10,500 Crores (ST agree loan) at 0% interest
for the year 15-16.
 MT and LT loan upto Rs. 3 lakh at 3% interest.
Loans disbursed in the year 1-4-14 to 31-3-15
(figers in crores)

Particulars
ST loan
MT loan
LT laon
No of Farmers and
amount
Out of which new
members and amount
2063148
109206
Rs. 9,286/-
Rs. 1,174/-
15769
14631
Rs. 293/-
Rs. 275/-
26287
15493
Rs. 318/-
Rs. 165/-
Funds involved by various Institutions
ST agri loans disbursed through PACS
Sr.
No.
Name of Institution
Funds involved
(Rs. In crores)
1.
Nabard
4,480.00
2.
Apex Bank
1,276.00
3.
DCC Bank
3,032.00
4.
PACS own fund
179.00
5.
Commercial Bank
319.00
(Target 10,000 crores)
Total
9,286.00
Target and Achievement of MT & LT Loan
Particulars
Target
Achievement
2013-14
2014-15
2013-14
2014-15
MT loan
375
400
309
293
LT loan
183
300
212
318