In the Karnataka Co-operative Societies Act, 1959 (Karnataka Act 11 of 1959),-
(1) in section 2, after clause (e), the following clause shall be inserted, namely :-
''(e-1) 'credit agency' means a credit agency as defined in the Karnataka Agricultural Credit Operations and Miscellaneous Provisions Act, 1974;'';
(2) in sub-section (1) of section 18 after the words ''any individual'', the words ''or any credit agency'' shall be inserted;
(3) section 59 shall be renumbered as sub-section (1) of that section and after sub-section (1) as so renumbered, the following sub-section shall be inserted, namely :-
''(2) Notwithstanding anything contained in sub-section (1), such co-operative societies or class of co-operative societies as the State Government may, by notification, specify shall have power to borrow from a credit agency subject to such conditions as may be prescribed.''
(4) after section 65, the following sections shall be inserted, namely :-
''65A. Report of audit, inspection and final report to be made available to a credit agency :-
The Registrar shall draw the attention of a credit agency financing a co-operative society to the defects noted in any audit, inquiry or inspection of such co-operative society and shall also supply a copy of each of such audit or inquiry report, if demanded in writing by such credit agency.
65B. Inspection of books of co-operative society by a credit agency :-
(1) A credit agency shall have the right to inspect the books of any co-operative society which has either applied to the credit agency for financial assistance or is indebted to it.
(2) The inspection may be made either by an officer of the credit agency or a member of its paid staff authorised by the credit agency as competent to undertake such inspection.
(3) The officer or member so inspecting shall, at all reasonable times, have free access to the books, account, documents, securities, cash and other properties belonging to or in the custody of the co-operative society and may also call for such information, statements and returns as may be necessary to ascertain the financial conditions of the co-operative society, and to ensure security of the sums lent to it by the credit agency ;'';
(5) in section 70, in clause (d) of sub-section (1), after the words ''co-operative society'', the words ''or a credit agency'' shall be inserted;
(6) after section 71A the following section shall be inserted, namely:-
''71B. Powers of credit agency to proceed against members of a co-operative society for the recovery of money due to it from such society :-
(1) If a co-operative society is unable to pay its debts to a credit agency by reason of its members committing default in the payment of the moneys due by them, the credit agency may direct the committee of such co-operative society to take proceedings against such member under section 70 or initiate proceedings under section 101, as the case may be, and if the committee fails to do so within a period of ninety days from the date of receipt of such direction the credit agency may itself proceed against such defaulting members under section 70 or section 101, as the case may be, in which case, the provisions of the Act, the rules or the bye-laws shall apply as if all references to the co-operative society or its committee in the said provisions, were reference to the credit agency.
(2) Where a credit agency has obtained a decree or award against a co-operative society in respect of money due to it from the co-operative society the credit agency may proceed to recover such moneys firstly from the assets of the co-operative society and secondly from the members of the co-operative society to the extent of their debts due to the society.''