Q.The guiding principle on which a credit co-operative society works is:

A credit co-operative society exists to serve its members, not to earn maximum profit, and it is run on the co-operative motto rather than on capital power.

Profit-maximisation, control by the biggest shareholder, and lending only to outsiders all contradict the co-operative idea, so only option (b) fits.

A credit co-operative society is founded on the co-operative motto of self-help through mutual help: members solve their own credit problems collectively, the savings of some becoming the loans of others.

Option-by-option analysis:

• (a) Maximum profit for shareholders — Wrong. The society's motive is service, not profit; any surplus is used for members' benefit and reserves.
• (b) Self-help through mutual help — Correct. This is the very principle on which credit co-operation rests.
• (c) Control by the largest shareholder — Wrong. Co-operatives run on 'one member, one vote', so no member controls the society merely by holding more shares.
• (d) Lending only to non-members — Wrong. A credit society lends primarily to its own members.

Students often pick (a) by confusing a co-operative with a joint-stock company. Remember that in a co-operative, service — not profit — is the motive, and voting power does not depend on the number of shares held.