Sections 65 to 67 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 65 to 67 set three limits on a multi-State co-operative society's money. It cannot contribute to an institution that furthers the interest of a political party. It cannot, unless it is a co-operative bank, lend to a member against his share or against a non-member's security. And its borrowing in a financial year is capped by a multiple of its share capital and reserves. The 2023 Amendment Act changed only the multiple in section 67. This article states the sections as per the Ministry of Cooperation copy of the Act read with the Multi-State Co-operative Societies (Amendment) Act, 2023.
Section 65: no contribution, in money or in kind, direct or indirect, to an institution whose object is furthering the interest of a political party. Section 66: a society other than a co-operative bank cannot lend to a member on the security of his share or of a non-member, but may lend to a depositor on the security of his deposit. Section 67: deposits and loans received in a year cannot exceed such multiples as may be determined by the Central Government of subscribed share capital plus accumulated reserves, less accumulated losses; debentures are limited to twenty-five per cent of paid-up share capital.
Section 65: no contribution to political institutions
"No multi-state cooperative 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."
The bar is wide in three directions: the form (money or in kind), the route (directly or indirectly) and the recipient (an institution with that object). The section does not say what happens if a society contributes, and does not define "institution". The effect of a breach is not stated in section 65 itself. If you are checking a society's past contributions or its borrowing against these sections, our legal consultation team can help.
Section 66: restriction on loans
Sub-section (1)
"A multi-state cooperative society, other than a cooperative bank, shall not make a loan to a member on the security of his share or on the security of a non-member."
Two securities are barred, but only for a society "other than a cooperative bank": the member's own share, and the security of a non-member. So a co-operative bank is outside this sub-section. For a co-operative bank the Act says nothing further here about the Reserve Bank or the Banking Regulation Act, 1949. Note the link with section 55: the society has a charge on a member's share for debts due to it; see our note on charge and set-off on shares.
Sub-section (2)
"Notwithstanding anything contained in sub-section (1), a multi-state cooperative society may make a loan to a depositor on the security of his deposit." A depositor can therefore borrow against his own deposit even from a society covered by sub-section (1).
Section 67: restrictions on borrowing
Sub-section (1): extent of deposits, loans and grants
"A multi-state cooperative society may receive deposits, raise loans and receive grants from external sources to such extent and under such conditions as may be specified in the bye-laws." The bye-laws set the extent and the conditions. Two provisos limit this.
The first proviso, as amended in 2023, is that the total amount of deposits and loans received during any financial year "shall not exceed" such multiples as may be determined by the Central Government of "the sum of subscribed share capital and accumulated reserves". The 2023 Amendment Act (Act 11 of 2023, in force from 3 August 2023 by notification S.O. 3493(E)) replaced the words "ten times" with "such multiples as may be determined by the Central Government". The Act gives no multiple and we give none; no determination is in the sources.
The second proviso is unchanged: "while calculating the total sum of subscribed share capital and accumulated reserves, the accumulated losses shall be deducted."
| Step | Calculation |
|---|---|
| 1 | Take subscribed share capital |
| 2 | Add accumulated reserves |
| 3 | Deduct accumulated losses |
| 4 | Apply the multiple determined by the Central Government |
| 5 | The result is the ceiling for deposits and loans received in a financial year |
The first proviso speaks of deposits and loans received "during any financial year", not the total outstanding. The text does not say whether grants are counted, because the proviso mentions only deposits and loans.
Sub-section (2): terms of borrowing
"Subject to provisions of sub-section (1), a multi-state cooperative society may accept funds or borrow funds for the fulfilment of its objects on such terms and conditions as are mutually contracted upon." Freedom to contract is subject to sub-section (1).
Sub-section (3): debentures
"A multi-state cooperative 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 objectives to the extent of twenty-five per cent of its paid-up share capital." The cap is twenty-five per cent of paid-up share capital. The sub-section is "subject to the provisions of any law for the time being in force" and does not name any such law. Debentures were not touched in 2023.
Note the interplay between the two limits. Sub-section (1) limits deposits and loans received in a year by reference to subscribed share capital and accumulated reserves; sub-section (3) limits debentures and instruments by reference to paid-up share capital. The text does not say whether debentures count within the sub-section (1) ceiling.
A practical example
Indus Multi-State Co-operative Society has subscribed share capital of Rs 20 crore and accumulated reserves of Rs 10 crore, and accumulated losses of Rs 2 crore. The base for the ceiling is Rs 28 crore. If the Central Government has determined a multiple, the society may receive deposits and loans in the year up to that multiple of Rs 28 crore; the Act gives no multiple. It may also issue non-convertible debentures up to twenty-five per cent of its paid-up share capital. A member asks for a loan against his shares; under section 66(1) the society, which is not a co-operative bank, cannot make it. The same member's deposit, however, can be the security for a loan under section 66(2).
What the 2023 Amendment Act changed
| Provision | Before | After |
|---|---|---|
| s.67(1) first proviso | "ten times of the sum of subscribed share capital and accumulated reserves" | "such multiples as may be determined by the Central Government" of that sum |
| ss.65, 66, rest of 67 | As printed above | Unchanged |
Need help with borrowing and lending limits?
A society that raises deposits or loans should keep a working paper showing the base, the multiple applied and the amount received in the year. Our legal consultation team can help you build it and check it against the bye-laws and section 67.
Key takeaways
- A society cannot contribute to an institution whose object is furthering the interest of a political party.
- A society other than a co-operative bank cannot lend to a member on the security of his share or of a non-member; it may lend to a depositor against his deposit.
- Deposits and loans received in a financial year are capped at such multiples as the Central Government determines of subscribed share capital plus accumulated reserves, less accumulated losses.
- Non-convertible debentures and other instruments are limited to twenty-five per cent of paid-up share capital.
Read next
- Investment of funds (section 64)
- Transactions with non-members and contributory provident fund (sections 68 and 69)
- Charge and set-off on shares and bar on attachment (sections 55 and 56)
- Multi-State Co-operative Societies Act, 2002: complete guide
Disclaimer: Based on the Ministry of Cooperation copy of the Multi-State Co-operative Societies Act, 2002 read with the Multi-State Co-operative Societies (Amendment) Act, 2023 (in force from 3 August 2023), as consulted on 2 October 2026. The Multi-State Co-operative Societies Rules, 2002 as amended, later notifications and later amendments are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.