Investment of funds
85. (1) Every provident society shall, unless it already holds invested in approved securities or securities mentioned or referred to in clauses (c) and (d) of section 20 of the Trusts Act, 1882
, not less than fifty per cent of the total assets of the society, invest in such securities every increase that takes place in those assets and in that part of those assets which is held in cash as soon as practicable after the increase takes place and in any case within six months of its taking place, until the total amount so invested amounts to not less than fifty per cent of the total assets of the society, and shall thereafter keep invested in such securities not less than fifty per cent of the total assets of the society:
Provided that for the purpose of determining the amount to be invested under this sub-section, any deposit made in cash under section 73 shall be taken into account as if such cash were Government securities amounting at the market value of the securities on the date the deposit was made to the total deposited in cash.
(2) No funds or investments of a provident society except a deposit made under section 73 or under the law of any State or country relating to insurance shall be kept otherwise than in the name of the society or in the name of a public officer approved by the Government.
(3) No loan shall be made out of the assets of a provident society, to any director, manager, managing agent, auditor, actuary, officer or partner of the society except on the security of a policy of insurance held in the society and within its
surrender value and no such loan shall be made to any concern of which a director, manager, managing agent, auditor, actuary, officer or partner of the society is a director, manager, managing agent, actuary, officer or partner:
Provided that nothing in this sub-section shall apply to loans made by a provident society to a banking company:
Provided further that where any event occurs giving rise to circumstances, the existence of which at the time of the grant of any subsisting loan would have made such grant a contravention of this sub-section, such loan shall, notwithstanding any contract to the contrary, be repaid within three months from the occurrence of such event or from the commencement of the Insurance (Amendment) Act, 1946, whichever is later; and in case of default, the director, manager, managing agent, auditor, actuary or partner concerned shall, without prejudice to any other penalty which he may incur, cease to hold office in the society on the expiry of the said three months.
[(3A) Any loan prohibited under sub-section (3), made before and outstanding at the commencement of the Insurance (Amendment) Act, 1940, shall be repaid before the 1st day of January, 1941, and in case of default the director, manager, managing agent, auditor, actuary, officer or partner who has received the loan or is connected with the concern which has received the loan, as the case may be, shall cease to hold office in or be a partner of the society and shall be ineligible to hold office in or be a partner of the society until the loan is repaid.]
(4) Any director, manager, managing agent, auditor, actuary, officer or partner of a society which contravenes the provisions of sub-section (3) who is knowingly a party to the contravention, shall without prejudice to any other penalty which he may incur be jointly and severally liable to the society for the amount of the loan, and such amount, together with interest from the date of the loan at such rate not exceeding twelve per cent per annum as the Chief Controller of Insurance
may fix, shall on application by the Chief Controller of Insurance to any Civil Court of competent jurisdiction be recoverable by execution as if a decree for such amount had been passed by that Court.
(5) The provisions of section 86D of the Companies Act, 1913, shall not apply to a loan granted to a director of a provident society being a company if the loan is once granted on the security of a policy on which the society bears the risk and the policy was issued to the director on his own life and the loan is within the surrender value of the policy.