(1) No society shall make a loan to any person other than a member, or on the security of its own shares, or on security of any person who is not a member:
Provided that with the approval of the general body, a society may make loans to or accept deposits from another society of its classification which is not its member.
52[(2) Notwithstanding anything contained in any other provisions of this Act or any other Act for the time being in force, every co-operative society, the primary object of which is to create funds for lending money to its members, shall at all times abide by the following conditions, namely:—
(a) loan shall not be sanctioned to any person who is not a citizen of India;
(b) the rate of interest charged for any kind of loan shall not be more than thirteen per cent per annum;
(c) in case of default in repayment of any loan, the penal interest chargeable shall not be more than two per cent per annum over and above the rate of interest applicable to the loan as per sanctioning terms;
(d) the processing fees payable by whatever name called for processing and sanctioning of any loan shall not exceed 0.25% of the loan amount sanctioned and such processing fees shall not be charged more than once for any loan account;
(e) interest on all types of loans shall be charged at every quarter ending with June, September, December and March or monthly basis as may be decided by the board of directors from time to time;
(f) there shall be no other charges or hidden costs while sanctioning of any loan except in accordance with this section.]
53[(3) Where the Registrar is satisfied that any society has failed to abide by any condition specified in sub-section (2), he may take following action against the person responsible, namely:—
(a) if such person is a member of the committee of the society, by order remove him from the committee and appoint any other person as a member of the committee for the remainder of the term of his office and declare him to be disqualified to be such member for a period of six years from the date of the order;
(b) if such person is an employee of the society, by order direct the committee to remove such person from employment of the society forthwith, and if any member or members of the committee, without any justifiable reason fail to comply with such order, remove the member and appoint any other person/s as member/s and declare them disqualified as provided in clause (a) above;
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(c) if any member of board is responsible for any violation of the conditions imposed under sub-section (2), take the cognizance of such violation and after giving due opportunity to the member concerned of being heard, may disqualify him to continue on the board for the remainder term. The member so disqualified shall be ineligible for being chosen as a director of said society forever:
Provided that before passing any order under this sub-section, the Registrar shall give a reasonable opportunity of being heard to the person or persons concerned and consult the federal society to which the society is affiliated.
(4) Order passed by the Registrar under subsection (3) shall be final.]