A Mumbai cooperative built on zero interest
Janseva Cooperative Credit Society is a Mumbai-based multi-state cooperative that says it operates with zero interest and offers what it calls an interest-free financial mechanism for financial inclusion. It is registered under the Multi-State Cooperative Societies Act, 2002, which places it under the Central Registrar of Cooperative Societies rather than a state registrar. That distinction affects where a member should complain and which authority keeps its records.
In March 2010 TwoCircles described the society’s early size as about 16,000 members, 23 branches across 12 states and a paid-up share capital of about Rs 4 crore as of 15 March 2010. Figures from 2010 are old, so a present-day member count and branch list have to be requested from the society. A member who joined years ago should also ask how the society has changed its products and branches since then, and whether the original membership terms still apply.
TwoCircles described the society in 2010 as regulated by the RBI, but a multi-state credit society is registered with the Central Registrar, so do not assume that RBI oversight or deposit protection applies. The society should be asked which authority supervises it and for its registration certificate. It should also not be confused with Janaseva Sahakari Bank in Pune or other Jana Seva banks, which are unrelated organisations.
Who can join Janseva Cooperative Credit Society
Membership rules are published on the society’s website. An applicant must be an Indian citizen, must be willing to subscribe to the society’s objectives, must be competent to contract under the Indian Contract Act, 1872, and must live or work in the areas where the society operates. In plain terms, a minor or a person who cannot legally sign a contract cannot join, and a person outside its operating areas cannot either. Ask the society to confirm in writing that you meet each of these conditions before you pay any fee, so that your application is not rejected later on a technicality.
There are two categories of member, ordinary and associate. Ask which category you would be placed in, and how voting rights, borrowing rights and fees differ between them, before paying anything. Ask also for the share amount and the entry fee in writing. Because membership is tied to residence or work in an operating area, a person who moves to another city should ask whether the membership continues and whether the new location is covered.
Deposits and savings products
In 2010 TwoCircles listed a range of products that match the idea of interest-free thrift: savings accounts, recurring deposits, a Hajj fund deposit, a children’s education fund, a self help group fund, the Amanah Saving Fund and the Amanah Daily Fund Deposit. The society’s current site speaks more generally of share and deposit mobilisation as one of its three service areas.
Because no interest is paid, the money placed in these accounts is not growing by a stated rate. Anyone who is offered a guaranteed return should ask how it is generated and in what legal form, since the society presents itself as interest-free. The product names above date from 2010, so confirm which of them are still open to new members.
Loans and financing on offer
In 2010 TwoCircles spoke of Shariah-compliant trading and investment loans, a Mutual Help Loan Group Fund and an Amanah Compensatory Loan Fund. In May 2021 Maeeshat gave sharper numbers: non-commercial loans of up to Rs 1 lakh with no interest or charges, and commercial loans of up to Rs 25 lakh. It added that the society had permission to work in the governments of 12 states.
Describing a loan as compliant is not a certification. Ask the society who supervises its contracts on Sharia matters; compliance of any contract is for a qualified scholar or Sharia adviser to decide. A borrower who cares about this should ask for the contract form used, whether it is a benevolent loan, a cost-plus sale or a partnership, and who has approved it.
Maeeshat also mentioned a Gold Medal in 2017 from the Islamic Finance Forum of South Asia. An award is a recognition by one body, not an audit, and it does not replace a check of the society’s accounts. A prudent applicant would ask for the sanction letter, the schedule of repayments and the list of any charges before accepting funds, and would compare the total repayable with the principal received.
Participatory business investment
Beyond deposits and loans, the society’s site describes investment services under the name Participatory Business Investment. These work on a Musharaka basis, meaning a partnership in which the partners put in capital and share profit by an agreed ratio while losses follow the capital contributed. The site lists three forms: general, SPV and an equity and asset-based form.
A profit-sharing investment can lose money. The investment carries no promise of return, and no historical payout figure should be assumed. Someone considering such an investment should ask for the project description, the profit ratio, the exit terms and the audited statements of the project before putting money in.
Microfinance for self help groups
One page of the site describes microfinance for self help groups. Members of a group save Rs 5 per day, for at least 25 days in a month. After one year, the group may borrow up to twice the savings it has built. The loan carries joint liability, which means the members stand together for repayment, and no collateral is taken.
Two models are described. In the fee-based model, the society charges a 1 percent processing fee on the loan and 4 percent of the loan is contributed to the group’s own fund. In the profit-based model, which starts after two years, the profits of a joint business are split 70 percent to the group members and 30 percent to the society.
Before applying, a group leader should ask for the exact repayment amounts and for the eligibility criteria for microfinance, and get the terms confirmed in writing, including what happens if one member defaults. Joint liability protects the lender, but it places pressure on the other members of the group, so a group should be comfortable with each other’s income before applying together. The Rs 5 daily saving rule, kept on at least 25 days a month, also means a group needs steady earnings, and members should agree in advance how a missed month will be handled and who keeps the passbook records.
What to check before joining
Ask the society how active it has been recently and how many members it has today. Do not assume any link between the society and Jamaat-e-Islami Hind or the Sahulat microfinance effort; if such a link matters to you, ask the society to confirm it in writing. Ask also which branch would serve you and who in the management can answer questions about your account, so that you know where to go if something goes wrong.
A short checklist helps. Ask for the registration certificate and the latest audited balance sheet, check the entry against the Central Registrar’s records, get every fee in writing, and be wary of anyone who asks for payment through a personal account. Ask whether the legal Ltd form is part of the name, and use the name exactly as it appears on the certificate. Keep copies of every form you sign and note the name of the officer who explains each product, since a verbal promise about returns or charges has no value unless it is written into the contract.