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Co-operative Banks

A Co-operative bank is a Co-op (as defined in the Co-operatives Act 20051) whose purpose is to be a bank, and the members of which have a common profession or occupation, or have a common membership in an association or organisation.

A. Registration

  1. It is an offence for any person who is not registered as a co-operative bank, under the Co-operatives Bank Act 2007, to:
    • use or refer to himself by any description or symbol indicating that he is a co-operative;
    • purport to be a co-operative bank;
    • use any description that includes the expression ‘co-operative bank’ or ‘co-op bank’;
    • conduct the business of any co-operative bank.2
  2. A co-operative bank may not provide, participate in or undertake banking services other than those authorised in respect of its type of co-operative bank.3

  3. Any person who provides false information in connection with an application for registration as a co-operative bank commits a crime.4

  4. No co-operative bank, or any representative body or support organisation of co-operative banks, or any other person may:
    • fail to comply with a directive under the Act; or
    • submit a document or information or make a statement that is false or misleading.5
  5. A co-operative which takes deposits, has 200 or more members, and holds deposits for them of more than R1 million must (within two months of meeting these criteria) apply for registration as a Co-operative Bank. It is an offence not to do so.6

  6. If the members of a co-operative consist of two or more co-operative banks, or financial services co-operatives which take deposits, or a combination of these, that co-operative too must apply for registration within two months of these criteria being met. It is an offence not to do so.7

B. Names

  1. All co-operative banks must have the words ‘co-operative bank’ or ‘co-op bank’ as part of their name.8

  2. A co-operative bank must set out its name in legible characters on any statement, notice or advertisement, and must indicate which type of co-operative bank it is.9

  3. A co-operative bank may not use a name other than the name under which it is registered, or any literal translation or abbreviation of such name.10

C. Reckless trading and lending

  1. Any director or executive officer of a co-operative bank who, directly or indirectly, is involved in the management of a co-operative bank while the business of the co-operative bank is carried on for any fraudulent purpose, or recklessly and with intent to defraud anyone’s creditors, commits a crime.11

  2. Any person (other than a director or executive officer) who, directly or indirectly, benefits from or is involved in the management of such a co-operative bank also commits a crime.12

  3. If a co-operative bank is unable to meet or maintain minimum capital, asset quality, liquidity and surplus reserves requirements it must immediately report this and the reasons therefor to the Supervisor of Co-operative banks.13

  4. A co-operative bank may not, without the Supervisor’s approval, make an investment with any one person, or grant a loan to any one member (including persons or members directly or indirectly controlled by the same person or member, or who are so interconnected that financial difficulties of one will affect the liquidity of another) which, whether alone or together with all previous investments or loans made or granted to that person or member, will exceed the allowable percentage as prescribed by the Minister of Finance.14

  1. As amended; the latest amendment was effected by Act 45 of 2013. 

  2. Section 77(1). 

  3. Section 77(3). 

  4. Section 78. 

  5. Section 80. 

  6. Section 80 read together with section 391(a). 

  7. Section 80 read together with section 392 read together with section 3(1)(a). 

  8. Section 10(2) read together with section 80. 

  9. Section 10(3) read together with section 80. 

  10. Section 10(4) read together with section 80. 

  11. Section 79(1). 

  12. Section 79(2). 

  13. Section 21(1) read together with section 80. 

  14. Section 23 read together with section 80.