Why Cooperative Credit Societies ar...
A Cooperative Credit Society is a financial organisation owned and run by its members. Credit c...
The continuous increase in the need for credit in every section of society has led to the formation and development of various credit institutions. Amidst the trend, it has led to the growth of various credit co-operative societies. The Banking Regulation Act, 1949, primarily identifies three types of institutions in this regard which is listed below:
And the last but not the least is the Credit Cooperative society, about which we are going to discuss in detail in this article.
The credit co-operative societies confine the scope of their activities to only their members and also do not perform any banking functions. These types of institutions are basically the thrift societies developed for inculcating the habit of savings among its members. In the absence of such credit societies, people of low-income groups, who are unable to get a loan from a bank because of the risk, would resort to taking loans from financiers at a high rate of interest. These societies provide a wide range of other banking and financial services like loans, F.D, R.D, saving, insurance, etc. For the credit co-operative society, its members only are the owners as well as the customers.
The credit cooperative societies are registered under the district registrar office of state with the Registrar of Co-op Society.
Once the society gets registered, two important points are to be attained, which are as follows:
The foremost benefits for the members of the credit cooperative societies are that they give high returns on deposit schemes and give a loan at a lower rate of interest. The reason for this is its lower running costs. That’s why they declare dividends every year for their members.
The following are required for its registration:
A plan providing how it will be beneficial for social and economic needs of its members and community.
Credit Co-operative Societies are the financial institutions that are being registered under the Multi-State Cooperative Societies Act 2002 of the Central Government and the Rules made thereunder. Therefore, it is compulsory by law for these societies to adhere to the rules and regulations. The ownership of these societies doesn’t lie with any particular individual, but all the members have ownership rights.
The governing body of the society is elected by its members in a democratic way, which is responsible for performing the operations of the society. The governing body also decides the policy matters in general with full transparency. Moreover, the operations of the co-operative societies are invigilated by the Cooperative Department.
On the other hand, individuals are the owners of the finance companies and the policies are formed accordingly. The general public and customers do not interfere with the procedures and operations of these companies. Therefore, the amount of transparency is very low as compared to the credit co-operative societies. As a result of this, the customers do not have sufficient knowledge about the workings of the finance companies.
Let’s take a look at the advantages offered by the multi-state credit co-operative society Registration in the present arena:
Therefore, in this arena of global competition, the rise of financial and credit lending institutions is on the positive verge. The supply is trying to meet the demand. Equal opportunity for all is the motto. In the same vein, the credit co-op societies are fulfilling their purpose by catering to the financial needs of the underserved sections of the society.
Read our article: Requirements For Forming a State Co-Operative Society