PEOVISTON OF BORROWING FACILITIES. 361 



each director, though working gratuitously, is bound to hold twenty 

 paid-up shares, value Rs 1,000, on which he cannot borrow the 

 secretary (or manager) must similarly hold 100 shares, value Rs 5,000 ; 

 which are held by the society as security ; the treasurer holds shares 

 and has given other security for Rs. 5,000. Some Nidhis require a 

 certain number of shares as a qualification for the directorate, but 

 there is nothing in the rules to prevent such directors from borrowing 

 on such shares. 



There does not appear to be any rule, as is general in Germany 

 and Italy, against directors borrowing from the society in one Nidlii 

 the directors may not borrow upon the shares held by them as 

 a necessary condition of office. In the Building societies of England 

 and America (with exceptions, e. ff., California) and the Nidhis of 

 Madras, the directors have all the rights of ordinary members, whereas 

 in the Co-operative banks of Continental Europe, their position is 

 generally held to entail many duties and responsibilities and to debar 

 them from the privileges of credit, except under special safeguards. 



Auditors. In most Nidhis audit is, of course, very simple matter, 

 but the larger ones, with thousands of transactions to the value of 

 lakhs of rupees, require most careful auditing. It is usual for the 

 rules to provide permanent as well as special auditors ; the former are 

 appointed for a year or term of years, the latter annually ; the former 

 are intended to scrutinize the accounts and securities very frequently, 

 viz., daily, twice a week, weekly, monthly, &c., according to the 

 Nidhi ; the latter conducts the usual annual examination. Some 

 Nidhis adopt the plan of disallowing any director from being an 

 auditor ; in others, the permanent auditor is always a director or 

 member of the managing committee. 



Funds. These proceed from the subscriptions of members chiefly, 

 and to a small degree from deposits ; the Nidhis do not borrow 

 except by deposits. In one society, which, however, resembles an 

 ordinary, bank, there is a capital composed partly of foundation 

 shares, fully paid-up, and partly of the ordinary subscription shares. 



The funds derived from shares are, of course, limited to the amount 

 declared ^by the statutes of the society. These shares have two 

 objects : (1) they are methods of saving and are investments ; (2) they 

 are means for (a) obtaining, and (h) paying off, a loan. 



, As investments these shares are very good ; the lowest fixed 

 interest generally given is 6J- per cent., viz. t 1 pie per month per 

 40 



