Who runs this interest-free society in Patna
The Al-Khair Cooperative Credit Society is a multi-state cooperative based in Phulwari Sharif, Patna, that describes itself as a completely interest-free microfinance institution for its members. It is registered as Al-Khair Co-Operative Credit Society Ltd under number MSCS/CR/136/2002, and its registered office is at Haroon Nagar, Sector-2, Phulwari Sharif. The society says it began in 2002 with about twenty individuals. Today it presents itself as a members’ organisation rather than a bank, which matters because the rules that apply to it differ from the rules that apply to a commercial bank.
A multi-state registration means the society is overseen by the Central Registrar of Cooperative Societies and not by a single state registrar. It is not an RBI-regulated bank, and it should not be compared with a scheduled commercial bank when you think about deposit safety. Banks in India work on interest under the Banking Regulation Act, 1949, and India has no licensed Islamic bank, so societies of this kind exist as an alternative channel with a limited footprint.
According to the society’s own description, it works in Bihar, Jharkhand, Uttar Pradesh and Delhi through 13 branches, with 35,645 members and eight products. These are self-reported numbers, and you should treat them as a statement by the society rather than an audited figure. In April 2018 IANS, writing for Business Standard, described a similar footprint, mentioning the Patna headquarters, around 100 employees and the same 13 branches.
Roots in a charitable trust
The idea goes back to the Al-Khair Charitable Trust, which was established in 1998. IANS said in 2018 that the cooperative was started in the early 2000s by a group of educated Muslims, with a small office in Patna and two employees. The society itself gives 2002 as its founding year, and a reader who needs an exact date should ask the society for its registration papers.
IANS also stressed that borrowers were not limited to one community, noting that nearly 20,000 people had received interest-free loans and that about half of them were Hindus. That detail is useful for anyone in Bihar wondering whether membership is open: the model is described as community finance built on mutual trust, and in 2018 it was presented as open to people of different faiths.
What was said in 2018
IANS added that over Rs 50 crore had been lent in roughly a decade, with typical loans in the range of Rs 5,000 to Rs 50,000. It explained that a nominal service fee covers salaries and rent in place of interest. Those figures describe the position in 2018, so ask the society directly for its current activity levels before you rely on them.
Joining Al-Khair Cooperative Credit Society: shares and fees
Loans and most services are for members only, so membership is the first step. A person buys shares of Rs 10 each and must hold at least ten of them, which means Rs 100 in share capital. On top of that the society charges an admission fee of Rs 50 and asks for a donation of Rs 50. Together, a new member should expect to pay Rs 200 at the start, based on the amounts the society publishes.
Shares are not a deposit and they are not a loan. They are the member’s ownership stake in the cooperative, and the number of shares later plays a role in borrowing, because the society links the loan amount to the shares a member holds. Ask the society in writing how shares can be withdrawn or transferred when you leave.
Deposit products that pay no interest
The society accepts several types of deposit and says it pays no interest on any of them. Amanat is the basic savings-style deposit with a minimum of Rs 100. The daily deposit account starts from Rs 50 and suits traders and daily earners who set aside small sums. Sahyog is a time-bound deposit for six months or multiples of six months. The society also offers earmarked fund accounts for a stated purpose and a Haj account for pilgrimage savings.
In 2009 the society also listed call and recurring deposits and Growth Fund certificates that work on profit-and-loss sharing. Ask the society whether they are still offered. If a deposit is described to you as earning a fixed return, ask for the written terms, because a society that rejects interest should explain how any payout is justified.
Daily deposits matter for another reason. A regular record of small deposits is what makes a member eligible for a demand loan, so the deposit habit and the borrowing right are tied together.
The demand loan step by step
The main loan described by the society is the Demand Loan, an eight-month facility for personal and household needs. No interest is charged. In its place the borrower pays a one-time fixed service charge plus GST. The society’s lending rules for this product were approved on 31 December 2011, which shows the product has a long-standing written framework.
To qualify, the applicant must already be a member and must have held an account for at least three months with regular daily deposits. The account balance needs to stand at 10 percent of the loan requested, and the member’s shares must also equal 10 percent of the loan. A Rs 20 application fee applies. Someone who wants Rs 40,000, for example, would need Rs 4,000 in the account and Rs 4,000 worth of shares, so planning the build-up early is wiser than applying in a hurry.
Ask the society for the maximum loan amount, the service charge rate and the repayment schedule. The society also says it offers no online loans, so the process is handled through its branches. Before signing, ask for the service charge in rupees, the instalment dates and the total cost in writing.
Guarantors and security for borrowers
The guarantee rules depend on loan size. Below Rs 1 lakh, the borrower needs one member as guarantor and one family member. From Rs 1 lakh upward, two members and one family member must stand behind the loan. These requirements show that the cooperative relies on social trust as well as paperwork.
As security the society accepts a cheque, gold, or the original document of a property or vehicle. The choice depends on the amount and on what the borrower can offer. Keep in mind that handing over original documents means you cannot use that asset elsewhere until the loan is cleared, and ask for a receipt listing every document you submit.
Questions to put to the branch
- What is the exact service charge for my loan amount, and does GST apply on it?
- On which dates are instalments due within the eight months?
- Which original documents will you hold, and when are they returned?
- What happens to the guarantors if I miss a payment?
Services listed in 2008 and 2009
Radiance Weekly, using figures from 2008 and 2009, listed further services. Demand loans ranged from Rs 2,000 to Rs 10,000, short-term business loans on a mudharaba basis went up to Rs 20,000, and consumer durables could be financed on a cost-plus murabaha basis for goods priced up to Rs 30,000. In murabaha the seller discloses the cost and adds an agreed mark-up, and the financier must own the item before selling it.
Those figures gave the authorised share capital as Rs 25 lakh and the paid-up capital as Rs 11.12 lakh on 31 March 2009, with Rs 3.02 crore lent over eight years and three branches at that time. Comparing them with the 13 branches and 35,645 members the society reports today shows how far it grew, but the old limits should not be read as today’s limits.
Checks before you deposit or borrow
An independent description from April 2018 is not the same as a clean bill of health. Rely on the society’s own papers and be wary of look-alike websites offering Islamic loans in its name.
A sensible approach is to ask for the registration certificate, the latest audited accounts and the written lending rules. Check that the registration number matches the Central Registrar’s records. Whether any religious ruling covers the products is for a qualified scholar or Sharia adviser to decide; the society’s name or description does not settle it.
Finally, remember that a deposit in a cooperative society does not carry the same insurance protection as a bank deposit, so keep only an amount you can afford to leave with a members’ organisation, and keep every receipt.