Maharashtra Board Class 11 Cooperation Chapter 5 Credit Co operative Society PDF Download

Credit Co-operative Society

5.1 Introduction

The co-operative movement in India was started by establishment of Credit Co-operative Society. These societies were established with an objective to provide short and middle term loans to the farmers in rural area. In olden days loan were given by the moneylenders to the farmers in rural areas. But these moneylenders were exploiting farmers. Hence to save the farmers from the exploitation by moneylenders and to fulfil the financial needs of the poor farmers. In 1904, British government encourage the establishment of Credit Co-operative Society. Credit co-operative society were established to provide strong alternative for moneylenders. Accordingly, in 1904 Credit Co-operative Societies Act was passed by British government. According to the provision of this Act credit co-operative societies were established in each and every village.

Teacher's Note

Credit co-operative societies help poor farmers get loans without being cheated. In India, many villages have these societies that give small loans to farmers at fair prices.

Exam Trick

Remember: 1904 is the year when Credit Co-operative Societies Act was passed. Think of it as the year when farmers got saved from moneylenders.

Points to Remember

Credit societies started in 1904 by the British government.
They give loans to poor farmers in villages.
These societies protect farmers from moneylenders.
They work on cooperative principles.

Three Tier Structure Of Credit Co-operatives

Commercial bank, Public sector bank, Urban co-operative bank provides loan to business and industrialist. Co-operative bank provides loan in rural area to marginal farmers, land labours, craftsmen, artisan, small businessmen and people of weaker section of society. The structure of Co-operative banking is three-tier, at state level State Co-operative bank, at district level District Central Co-operative bank and at rural(village) level Primary Credit Co-operative society are established. The Credit Co-operative societies are established with an objective to protect the people from the cheating and exploitation of landlords and private moneylenders.

Teacher's Note

The three-tier structure means there are three levels. Like in your school, there is a principal at the top, then teachers, then students.

Exam Trick

Remember: State bank is at top, District bank in middle, and Village society at bottom. Think of it like a pyramid.

Points to Remember

There are three levels in cooperative banking structure.
State Co-operative Bank is the apex or top bank.
District Central Co-operative Bank connects state and village level.
Primary Credit Co-operative Society works in villages.

5.2 Meaning And Definition Of Credit Co-operative Society

Meaning

The societies which are formed for development of agricultural sector on co-operative principles to provide loan at reasonable interest rate are known as Credit co-operative society.

The working area of Credit co-operative society is the village in which Credit co-operative society is established. The farmers, artisan, craftsmen, small businessmen of that village are the members of this society. This society encourages the habit of saving among members. This society provides loan to the farmer members at low rate of interest. These co-operative societies are working for economic development of agricultural sector, farmers and are trying to improve their standard of living. These co-operative societies provide loan as per the primary needs of the members, these co-operative societies directly deal with the members (directly provides loan to the members), hence they are known as Primary Credit Co-operative Societies. Credit co-operative societies works in rural and urban areas.

Definition

"Without considering wealth or economic condition the society which provides banking services to economical poor person by accepting available security such societies are known as Credit Co-operative Society." - Henry Wolff

"The society established to increase agricultural productivity, to improve the standard of living of farmers, in addition to provide short and medium-term loan, to supply agricultural requirement, various services and supply of essential commodities and to market agriculture goods, etc. is known as Credit Co-operative Society"

Teacher's Note

A credit co-operative society is like a bank run by villagers for villagers. In your area, the credit cooperative society helps farmers buy seeds and fertilizers on easy terms.

Exam Trick

Remember: Credit = loan, Co-operative = together, Society = group. So it is a group that gives loans together.

Points to Remember

It provides loans at reasonable interest rates.
It works in villages and helps farmers.
Members save money and get loans when needed.
It protects people from moneylenders.

5.3 Features / Characteristics Of Credit Co-operative Society

1. Open and Voluntary Membership : The membership of Credit co-operative society is open for all. Credit Co-operative society are voluntary association. Farmers, land labours, workers and economically weaker people in the rural area come together and voluntarily form Credit co-operative society. There is no compulsion for membership on any person.

2. Objectives of Society : Credit co-operative society are formed basically with an objective to provide short term loan to members, keep control on utilization of loan amount, participation in agricultural programs, encouraging saving habit, recovery of loan as well as providing economical and technical guidance to the members.

3. Working area of Society : The working area of Credit co-operative society is the village where it is established. Now this limit is up to the villages coming under 4 to 5 kilometers. Normally 3000 peoples or 500 farmer families are expected to be covered or benefited from this society.

4. Limited Capital : As the Credit co-operative society is formed by marginal farmers, agricultural labours, land owners and economically weaker people, so, their capacity of purchasing share is less. Hence, the capital of Credit co-operative society is limited.

5. Loan for purchase of agriculture needs : Credit co-operative society provides loans to the farmer members for the purchase of agricultural needs like seeds, fertilizers, insecticides, pesticides, etc.

6. Affiliated to District Central co-operative bank : Primary Credit Co-operative Societies are affiliated to District Central Co-operative Banks. All Primary credit co-operative societies are members of District Central Co-operative Banks. Primary Credit Co-operative Society prepares the plan for loan supply and submitted it to the District Central Co-operative Bank and under the guidance of District Central Co-operative Bank they provide loan to the members.

7. Important place in rural credit supply : Credit Co-operative Society has direct relation with farmer members. Therefore, as per the policy of National Bank for Agricultural and Rural Development (NABARD) all credit supply received by District Central Co-operative Bank is distributed through Primary credit co-operative societies. So, Credit co-operative societies has important role in rural credit supply.

8. Loan on security (mortgage) : Credit Co-operative Society provides loan to the farmers on fixed and non-fixed assets as security. While sanctioning loan Credit Co-operative Society takes two members as a guarantor. Crop security becomes important while sanctioning loan to agriculture production.

9. Limited loan supply : As the capital of Credit co-operative society is limited, they are not able to provide loan as per the member's demand. It means they provide limited loan to the members.

Teacher's Note

Nine important features make a credit society different from a normal bank. In your village, the credit society has limited money, so it gives loans only to village farmers for farming.

Exam Trick

Remember: Open membership = anyone can join, Limited capital = less money, Limited loan = not much money to give. These three go together.

Points to Remember

Membership is open and voluntary for all.
It gives loans only for agricultural needs.
Capital is limited because members are poor.
It is connected to District Central Co-operative Bank.
It gives loans with security or guarantee.

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