CO129-555-6 Banking crisis 24-9-1935 - 18-10-1935 — Page 36

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contributions on withdrawal from membership of Societies,

and the effect of this right on the ability of Co-operative

Societies to fulfil the proposed requirement under the

Banking Ordinance with regard to the minimum paid-up

capital (or, in the case of Co-operative Societies, "own

funds"). The present practice is that a member desiring

to withdraw from a Society must notify his intention at a

specified time, must settle his own loans from the Society

and any loans for which he is guarantor; and after that a

period varying (according to the rule of the individual

Society) from three months to two years must elapse before

he can obtain refund of his member's fee or contribution.

One of the Co-operative bankers who appeared before the

Chairman stated that in his opinion there was no objection

to extending the time limit within which a member may

obtain refund of his contribution on withdrawal from

membership in the case of Societies registered under the

Banking Ordinance. We feel, however, that a more effective

measure, in cases where "own funds" fell below the

statutory minimum, would be to provide for the Society to

cease receiving deposits from non-members, and that this

obligation should remain in force for one year after the

prescribed minimum had been restored and maintained.

think that it is necessary to apply this restriction for

one year after the restoration of the minimum in order to

avoid having to apply and remove the restriction at more

frequent intervals in case of fluctuations in the membership

of Societies whose own funds are just on the borders of the

prescribed minimum.

18.

We

We also recommend that Banks should not be allowed

to mention on their letter paper or in their advertisements

their authorised capital unless they mention their paid-up

capital as well.

19.