Meaning and Definition of a Credit Co-operative Society

Money is the lifeblood of every economic activity — a farmer needs it to buy seed and fertiliser, a small trader to stock goods, a salaried worker to meet a sudden family expense. Yet for centuries the people who needed small sums the most were the very people that commercial banks would not lend to, because they had no security to offer. Left with no honest alternative, they fell into the grip of the village moneylender, who charged crushing rates of interest and often seized their land when they could not repay. The credit co-operative society was created as the ordinary person's answer to this problem.

A credit co-operative society is a voluntary association of persons of small and moderate means who join together to pool their savings and, out of that common fund, provide loans to one another at reasonable rates of interest. Its single guiding idea is self-help through mutual help — the members are at the same time the owners of the society, the depositors who supply its funds, and the borrowers who use them. Profit is not the driving motive; the real aim is to free members from the exploitation of the moneylender and to encourage the habit of thrift.

Because it is a co-operative, it is registered under the co-operative societies law of the state (in Maharashtra, the Maharashtra Co-operative Societies Act, 1960), it enjoys a separate legal existence apart from its members, and it works on the settled principles of co-operation — open membership, democratic 'one member, one vote' control, and service before profit. In the Maharashtra Std XI Co-operation syllabus, the credit co-operative society is studied as the earliest and most widespread type of co-operative in India, and the model on which the whole rural credit structure was later built.