A credit co-operative society is an independent group of people belonging to the same class, come together voluntarily to tend to they're common economic, social and cultural agendas and requirements through an enterprise which is jointly-owned and controlled democratically by such people. It reflects the willingness of the society to be able to help each other while balancing the principles of social responsibility and mutual help for the benefit of members and profit earning to be able to operate efficiently for the long term. The Co-operative Societies Act, 1912, provides for credit co-operative society registration.
The credit co-operative societies have played a major role in promoting economic welfare and a sense of self-sufficiency among the rural community and the less stable sections of the society. Unlike banks and other financial organizations which are aimed at the creation of profits, co-operative societies balance the business durability of the unit with the principle of helping the members honestly to attain financial stability. Welfare thus remains the primary motto of such organizations.
Credit Co-operative Society may be categorized according to the primary area in which the unit deals with. Some common types are:
1. Co-operative Credit Societies: It accepts deposits from members and provides loans to members at reasonable interest rates. The objective here is to develop the habit of saving among members and to be able to give members loans when they require at interest rates considerably lower than those of the banks and financial institutions. The formalities for credit cooperative society registration are simpler and the process is less complex. They are of two types:
a. Agricultural credit societies
b. Non-agricultural credit societies.
2. Housing Co-operatives: these are formed with a common aim of acquiring residential property and to undertake all the procedures relating to it example governmental approvals, development of the property etc. Such co-operatives developing housing societies by themselves for their members. This benefits them since the society is able to fetch wholesale rates from all the retailers and vendors involved, eventually which brings down the prices for each of the member individually. The society may even provide houses to non-members; the profits earned are either shared by the members or utilized by the society for its further business.
3. Consumers’ Cooperative Societies: It is the most basic form of unit wherein the societies help its members for the purchase of household items. It is a regular practice that the society buys such items in bulk and provides the members with the items required at a price lot lesser than those of retail shops.
4. Marketing Co-operatives: These have the objective of ensuring a steady market for the output of members and are suitable for marketing of agricultural products. It seeks to protect the members from the exploitation by the middlemen. A Collective bargain is done by the unit on behalf of the members so as to obtain a higher price. It assures a fair pricing for their produce.
5. Producers Co-operatives: small-time producers require equipment, tools etc for their regular course of business. Such societies thus buy materials required in bulk which fetches it a far lower price than the market and then provide it with minimal profit to the members. The prices still remain lesser than that of the market for retail and additionally the society is able to earn profits to aid in future transactions. The commission of middlemen is eliminated here.
6. Co-operative Farming Societies: Popularly such groups are formed by farmers with multiple aims. The societies are able to group the farmers together for providing them maximum information regarding the best practices and technology that may be utilized for agriculture. Implementation of modern methods is made easier with the help of a collective force; awareness regarding optimum utilization of the available resources, buying quality products like seed, fertilizers, tractors etc. With the welfare of farmers who are members, the society works on the way with the aim of not only helping the farmers but also bringing itself profits to work in a better manner in the future.