CO-OP BANKING PRACTICE

CO-OP BANKING PRACTICE: 

CO-OP BANKING PRACTICE Based on Co-op Bank Act, 2007

Definition: 

Definition A Co-operative Bank is defined as a Co-operative (Co-operative ), registered as such in terms of the c o-operatives Act, 2005 (Co-operatives Act), and whose members: are of similar occupation or profession or who are employed by a common employer or who are employed within the same business district have common membership in an association or organisation, including a business, religious, social, co-operative, labour or educational group, or reside within the same defined community or geographical area.

Purpose of Coop Bank Act: 

Purpose of Coop Bank Act See manual p. 11(b), 12(b) & 13 (b) PURPOSES OF COOP BANKS ACT OF S.A. Social & economic welfare of all South Africans (accessibility to banking services) Development of sustainable & responsible coop banks Appropriate regulatory framework (to protect members of coop banks)

Application: 

Application Act applies to all incorporated Co-operatives registered as Co-operative Banks in terms of the Act , as well as to all Co-operatives incorporated as such in terms of the Co-operatives Act, which take deposits from the public and which meet the following criteria (Criteria): have 200 or more members; and hold deposits of members to the value of one million rand or more.

NATURE AND SCOPE OF CO-OPERATIVE BANKS : 

NATURE AND SCOPE OF CO-OPERATIVE BANKS The Act makes provision for registration as one of the following types of Co-operative Banks: a primary savings Co-operative Bank a primary savings and loans Co-operative Bank a secondary Co-operative Bank a tertiary Co-operative Bank.

Primary savings Co-operative Banks : 

Primary savings Co-operative Banks Primary savings Co-operative Banks may only provide, participate in or undertake the following banking services: the soliciting and accepting of deposits from its members the opening of savings accounts for its members, in the name of each member, into which that member may deposit or withdraw money and from which that member may instruct the Co-operative Bank to transfer or pay money the borrowing of money from the Development Agency for Co-operative Banks (Development Agency) and its members up to a prescribed percentage of the assets held by it

PowerPoint Presentation: 

the opening of a savings account or cheque account in the name of that Co-operative Bank with any banking institution the making, drawing, accepting, indorsing, or negotiating of negotiable instruments that are paid to the order of or made out and endorsed by that Co-operative Bank the providing of trust or custody services to members the conducting of any additional banking services as may be prescribed by the Minister the investing of money deposited with it in investments prescribed by the Minister.

Primary savings and loans Co-operative Banks : 

Primary savings and loans Co-operative Banks Primary savings and loans Co-operative Banks may, in addition to the services that may be provided by primary savings Co-operative Banks, provide the following banking services : the granting of secured and unsecured loans to its members to a prescribed maximum aggregate value prescribed by the Minister the conducting of any additional banking services and the investing of money deposited with it in any investments prescribed by the Minister .

Secondary Co-operative Banks : 

Secondary Co-operative Banks may, in addition to the banking services provided by primary savings and loans Co-operative Banks also provide the following banking services : trading of financial instruments on behalf of its members opening of an account with a bank registered under the Banks Act to facilitate foreign currency transactions 3 l Co-operative Banks Act conducting of such additional banking services and investing of money deposited with it in any investment prescribed by the Minister.

Tertiary Co-operative Banks : 

Tertiary Co-operative Banks may , in addition to services provided by secondary Co-operative Banks, conduct such additional banking services and invest money deposited with it in any investments prescribed by the Minister

Registration Requirements: 

Registration Requirements A proposed Co-operative Bank will need to demonstrate in its application to the supervisor defined below, inter alia , that : the application has been made in accordance with the Act the business it proposes to conduct is that of a Co-operative Bank of the type to which the application relates it has sufficient human, financial and operational capacity to function efficiently and competently as a Co-operative Bank

PowerPoint Presentation: 

every person that is to be a director, managing director or executive officer of the proposed Co-operative Bank has the necessary experience, knowledge and qualifications to operate the proposed Co-operative Bank and is a fit and proper person the composition of the board of directors of the proposed Co-operative Bank is appropriate, having regard to the nature and scale of the business to be conducted

PowerPoint Presentation: 

the establishment of the proposed Co-operative Bank will be in the public interest the proposed Co-operative Bank complies with all of the provisions in the Act relating to the constitution of Co-operative Banks the proposed name of the Co-operative Bank complies in all respects with the appropriate provisions of the Act pertaining to the names of Co-operative Banks.

Constitution and functions : 

Constitution and functions The Act lists certain provisions that must be contained in the constitution of a Co-operative Bank , and it sets out the general functions which a Co-operative Bank may perform in addition to those referred to in the Co-operatives Act. These additional functions include : receiving grants and donations in relation to a secondary or tertiary Co-operative Bank, applying for registration as a representative body or accreditation as a support organisation

PowerPoint Presentation: 

being a member of and entering into an agreement with a representative body or support organisation establishing a dispute resolution scheme, together with other Co-operative Banks of the same type acting as an agent of its members or in the interest of its members as an intermediary of a banking institution, other Co-operative Bank, Co-operative, pension fund, provident fund, medical scheme, or insurance business.

Management of Co-op Banks: 

Management of Co-op Banks Apart from primary savings Co-operative Banks which may convert into primary savings and loans Co-operative Banks, the Act provides that Co-operative Banks may not convert into any other type of corporate or incorporate entities . A Co-operative Bank may, however, amalgamate with another Co-operative Bank and transfer its assets, rights, liabilities and obligations to such other Co-operative Bank in accordance with the provisions of the Act and section 57 of the Act.

Supervision of Coop Banks : 

Supervision of Coop Banks South African Reserve Bank must, with the approval of the Minister, appoint a suitable employee in its service as the supervisor of primary Co-operative Banks that hold deposits in excess of R20 million , secondary Co-operative Banks and tertiary Co operative Banks . A primary Co-operative Bank that holds deposits of R20 million or less will be subject to the supervision of a supervisor similarly appointed by the Development Agency.