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Loans from Cooperatives

Besides banks, the other major source of cheap credit in rural areas is the cooperative societies (or cooperatives). Members of a cooperative pool their resources for cooperation in certain areas. There are several types of cooperatives, namely:-

  • Farmers cooperatives
  • Weavers cooperatives
  • Industrial workers cooperative

Let us take the example of Krishak Cooperative.

  • Krishak Cooperative functions in a village not very far away from Sonpur.
  • It has 2300 farmers as members.
  • The Cooperative accepts deposits from its members.
  • Using the deposit as collateral, the Cooperative obtains a large loan from the bank. The loan amount received from the bank is used as funds to provide loans to the members.
  • Once the members repay the loans the amount is repaid to the bank and a fresh loan is taken from the bank.
  • The Cooperative provides loans to its members for the purchase of agricultural implements, loans for cultivation and agricultural trade, fishery loans, loans for construction of houses and for a variety of other expenses.

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