Cooperative housing societies in India need to raise funds to fulfill various financial requirements and effectively manage the functioning and maintenance of the society. These funds are necessary for routine maintenance and repairs of common areas, infrastructure, and amenities. Additionally, funds are required for developing and improving the society’s infrastructure, covering administrative expenses, paying for utilities and services, purchasing insurance policies, complying with legal and statutory requirements, implementing upgrades and modernization, and maintaining contingency and reserve funds.
By raising funds, cooperative housing societies ensure the smooth functioning, maintenance, and development of the society, enhancing the quality of life for members and preserving the value of their assets. Model bye-laws of cooperative housing society have clearly stated in the bye-law no. 7, the modes by which societies can raise funds for themselves.
MODES OF RAISING FUND OF THE COOPERATIVE HOUSING SOCIETY
- Share Capital: Cooperative housing societies can raise funds by issuing shares to their members. Members can purchase these shares, and the capital collected through share subscriptions can be used for the society’s financial needs.
- Monthly Maintenance Charges: Societies can collect monthly maintenance charges from their members. These charges are typically based on the size of the flat/unit and cover expenses such as common area maintenance, security, repairs, and administrative costs.
- Non-Occupancy Charges: If a member rents out their flat/unit to someone else, the society can levy non-occupancy charges. These charges are additional fees imposed on members who do not occupy their premises and can generate revenue for the society.
- Sinking Fund: Cooperative housing societies can create a sinking fund by setting aside a portion of the maintenance charges collected from members. The sinking fund is primarily used for future repairs, renovations, and replacements of common areas, infrastructure, or major assets.
- Common Facility Charges: If a society offers additional amenities or facilities such as a clubhouse, gymnasium, swimming pool, or parking space, it can collect charges for using these facilities. The revenue generated from these charges can be used for maintenance and development purposes.
- Loans and Borrowings: Societies can apply for loans from financial institutions, cooperative banks, or government schemes to raise funds. Loans can be used for various purposes such as construction, repairs, renovations, or infrastructure development. However, the society must fulfill the eligibility criteria and comply with the necessary legal requirements for obtaining loans.
- Grants and Subsidies: Depending on the nature of the cooperative housing society and the government policies in place, societies may be eligible for grants, subsidies, or financial assistance from government bodies or development authorities. These funds can be utilized for specific purposes outlined by the granting agency.
- Penalty and Interest Charges: Societies can impose penalties or interest charges on members for late payment of maintenance dues or for violations of society rules and regulations. These charges can serve as an additional source of revenue for the society.
It’s important to note that the specific rules and regulations regarding fundraising for cooperative housing societies may vary depending on the state in which the society is located. Societies should always adhere to the provisions laid out in the relevant cooperative housing society acts and bye-laws and consult with legal professionals or management experts for guidance.