Co-operative Credit Societies in India: Registration and Benefits

Swetha Dhinesh

30 Mar, 2023

The growth of a thriving global network of co-operative credit societies has enhanced the standard of living in society. Co-operative Credit Societies are a great way to combine your resources and benefit from group savings. The importance and significance of co-operative groups should be understood by every Indian since they significantly promote income equality and overall well-being. One option for acquiring financial services without depending on traditional sources like banks or other lending institutions is through co-operative credit societies.

Co-operative Credit Society

A credit co-operative society is an independent group of people from the same class who voluntarily come together to address their shared economic, social, and cultural needs and objectives through a business they jointly own and democratically control. It shows how willing society is to lend a hand to one another in order to strike a balance between social responsibility and assistance for one another’s members. For its members, the goal of advancing the economy and society is crucial.

In India, there are a lot of co-operative credit societies. Credit co-operative societies are established to develop the economy and society by giving their members access to affordable credit at reasonable interest rates. A co-operative society is a voluntary grouping of people with similar requirements who work together to advance a shared economic interest. Using the concepts of self-help and mutual assistance, it seeks to serve the interests of the poorer section of society.

What Is The Aim Of Co-operative Credit Societies?

• The Co-operative Credit Society attempts to provide its members with goods at discounted prices, loans and so on at a reasonable cost.
• These societies eliminate any intermediaries by directly supplying commodities which is another vital role of a co-operative credit society.
• In general, the Co-operative Credit Society reduces middlemen’s additional profits in trade and business.
• They accept deposits from their members only.
• These Societies are explicitly designed to benefit the members financially.
• They provide loans to their members with low-interest rates.
• These Societies are the ones that are responsible for protecting the interests of rural consumers and producers.

Documents Required to register a Co-operative Credit Society

The following are the documents required to register a credit co-operative society in India:

• There must be a minimum of 50 members in each state.
• The board members should be at least seven and a maximum of 21.
• The name that the members of your credit co-operative society have proposed.
• The name and list of all promoter members.
• No Objection Certificate (NOC^[1]) of the intensive inquiry letter.
• Four copies of Model bye-law.
• Details and a copy of the decision from the pre-registration meeting. That comprises the money, members, the board, the operation etc.
• A certificate from the bank confirming the credit balance is in favour of the respective credit co-operative society.
• A document in writing comprising of a specific plan format that how a credit-cooperative society is valuable for the economic and social development of its member and community.
• Copies of the PAN Card and Aadhaar Card. Such documents have to be attested by the society’s promoter.
• Information about the head office address to be registered.

All the documents mentioned above are mandatory for credit co-operative society registration.

What are the Benefits of Registering a Co-operative Credit Society?

Credit co-operative societies are crucial in fostering an independent mindset. As a less developed sector of society, the rural population is taken into account while making decisions. They excel at balancing the business units’ stability with the notion that they should look out for their members’ financial security as their primary concern.

Let us discuss a few benefits of registering a credit co-operative society below:

• Anyone can Join for Free – No obstacle to membership exists until it is specifically mentioned. Such a society is open to all members without charge. There are no barriers based on gender, creed, ethnicity, caste, or religion. Any person can join the society and become a member at any time.
• Low-interest rates – The Co-operative Credit Society, in contrast to commercial banks, frequently offer lower interest rates on loans, making borrowing more reasonable for members.
• Simple and Easy to Form – The Credit Co-operative Society can be established quickly. A society can be created by ten (or more) adult individuals. Furthermore, joining a credit co-operative society is easy and convenient. The finest part is that forming the society needs to satisfy a few legal conditions.
• Limited Liability – Liability is constrained when a credit co-operative society is established. A member’s obligation is limited to the amount of capital they have contributed to society. The members gain since they won’t have to be concerned about losing their possessions and assets in the event that the society experiences a loss.
• All Members Have the Same Rights – The same rights apply to every member of society at all times. They can actively participate in the development or revision of social policy. It demonstrates how the credit co-operative group is run democratically and how each member is given the same respect.
• Only members are in charge – Because the members of these Societies run them, all decisions are always made with the benefit of the members in mind.
• Registration of LLP – In India, the majority of co-operative credit societies are registered as LLP societies. The main goal of establishing a Limited Liability Partnership (LLP) is to provide an easy-to-manage corporate structure that limits shareholders’ liability.
  One partner in a limited liability partnership is not responsible or liable for the wrongdoing or carelessness of another member. Combining the advantages of a firm and collaboration into a single organisational structure, people prefer LLP mostly.
• Participation of the community – Because local residents run these Societies, lending and borrowing decisions are made locally, keeping the needs of the community in mind.

How Can You Check a Co-operative Credit Society’s Registration Status?

There are a number of registered Credit Co-operative Societies. We can study it in several contexts, though.

• The state government appoints a registrar to handle registration when a co-operative credit association operates there since it is aware of the issues it may encounter.
• The Ministry of Agriculture will investigate if the credit co-operative society operates in several states.
• If the credit co-operative society runs in multiple states, it is called a multi-state co-operative society.

Conclusion

Registration of a Credit co-operative society plays an essential role in the effective and seamless working of the co-operative society. Co-operative Credit Society has been the best option for many people in India. They offer services to people who might not be eligible for traditional banking due to a low income, and memberships are frequently accessible. The operation of co-operative credit societies will be satisfactory if the State government oversees and monitors these institutions alongside the RBI.

Also Read:
Why Cooperative Credit Societies are a Mess?
Multi State Credit Cooperative Society Registration
Requirements For Forming a State Co-Operative Society