A cooperative society’s simple meaning is that many people of the same interest come together to form a society for themselves. This society has really its own importance in Indian economy.
There are various types of cooperative societies can be formed under influence of law.
- Farmer’s cooperative society
- Credit Cooperative society
- Housing Cooperative Society
- General Cooperative Society
Though, In this article we are going to discuss Credit Cooperative Society in detail.
Credit Cooperative Society
As the name suggests this kind of cooperative society is usually associated with many in one or another matter.
This society can be defined as the association of independent people who registered themselves under the law of the cooperative society formation and made to accommodate funds to the respective members of that particular cooperative society.
Registration of the credit cooperative society is necessary and it can be start with minimum 10 members.
The members of the credit cooperative society invest their savings amount in one treasure and try to collect funds in bulk.
One thing you must have to know about the credit cooperative society is that their member invests their own saved money in it. Society does not take any kind of loan or fund from outside.
Now you must be thinking what they actually do with this huge amount of fund?
The answer is simple, the credit cooperative society will borrow money from the needy person, who are actually the members of their cooperative society.
The concept of credit cooperative society is quite old in India. There are already too many credit cooperative societies are already established and running their day to day operation very successfully.
Best Example of Credit Cooperative Society.
Let’s try to understand this concept through one story. Hope you are going to like this.
Ashok Bhai wants to buy one car but he didn't have sufficient funds to buy that particular car. So He went into bank to take a loan. Ashok Bhai (To Manager) : I want to take a loan as I want to buy a new car. Bank Mangare (To Ashok Bhai): Sure sir, but do you have any collateral? Ashok Bhai: No, I don't have any collateral right now. Bank Maanager: Sorry sir, But you are not eligible for a loan, so we will not issue a loan on your name. (What is our understanding from this story? Let's discuss it in detail.)
From the above-mentioned story, it is quite clear that the Bank manager has denied giving a loan to Ashok Bhai. Now, what will he do?
Here comes the concept of credit cooperative society.
Ashok Bhai will contact to credit cooperative society to give him money from its treasure.
Suppose if Ashok Bhai is a member of that cooperative society then it will give him a loan easily, without interrogating him about the collateral.
Also the interest rate is very law in credit cooperative society compared to the loan given by the any private or government bank.
Any member of the cooperative society can take a benefits of this kind of service.
Final words on What is Credit Cooperative Society?
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