Chapter - 1

Introduction to Co-operation:-
A Co-operative Society is an enterprise formed and directed by voluntarily united members, to overcome some common
economic difficulties. Its management is purely democratic. It also serves for the needs for the community.

Definition:-

To Lambert, “a co-operative society is an enterprise formed and directed by an association of users applying within
which itself the rules of democracy and directly intended to serve its own members and community as whole”

For Herric, “Co-operation is the act of poor persons voluntarily united for utilizing reciprocally their own forces,
resources, or both under their mutual management to their common profit or loss”

Features of co-operation:-

1. It is an association of person:- Co-operation comes into existence when a group of person join hands together.
2. It is a voluntary association:- A person may at any time join in the co-operative society and at any time
withdraw his membership. There is no discrimination on the ground of community, religion, political ideology,
gender..etc
3. It is an enterprise:- Co-operative society is basically an enterprise. The society runs on business principles to
ensure economic benefits of its members.
4. Service objective:- The main aim of co-operative society is to serve it members rather than to earn profit. This
does not mean that it has no intention to earn profit. Co-operative society also needs profit. That means Its
primary objective is to serve its members, profit making is only its secondary objective.
5. Democratic management:- Each member in a co-operative society has only one vote irrespective of the number
of shares held by him. This ensures pure democracy in the management of a co-operative society.
6. Equality:- All the members in a co-operative society are treated as equal. There no discrimination on anyone on
the ground of religion, politics, economic status, social status, educational qualification..etc.

Objectives of a Co-operative society:-

1. Elimination of middlemen:- Middlemen are those individuals and firms who makes available the products
of producers to consumers. It includes wholesalers, retailers, agents, brokers, money lenders, suppliers of
other services such as transportation, storage, advertisement..etc They loot many benefits of consumers
and producers. Co-operative society helps to eliminate them.
2. Raising the economic status of the poor:- The basic objective of co-operative society is to raise the
standard of living of poor people.
3. Removal of evils of capitalism:- Capitalism leads to exploitation, inequality, unfair competition, and
concentration of economic power in the hands of few. Co-operation helps to wipeout these evils.
4. Raising the moral standard of its members:- The new feature of co-operative society is the combination of
business with ethics. That is conduct of business activity with honesty and truthfulness.
5. Increasing the prosperity of whole community:- Another objective of co-operation is to create among the
members a sense of community. It means making an individual deviate from the individualistic view.
6. Abolition of social inequalities:- Social inequality is the condition in which a few people enjoy certain
privileges because of their wealth, caste..etc A co-operative society aims to remove such inequalities.
7. Neutrality in religion and politics:- A co-operative society is expected to keep neutral on its religious,
political attitudes. Otherwise member welfare will be neglected.
 8. Development of co-operative life:- Co-operation aims at providing a co-operative life to weaker sections of
the society. It seeks to transform weak to strong and make them fit for a better life.

International Co-operative Alliance (ICA):-

ICA is a worldwide confederation of co-operative organisations. It was founded by international co-operative
congress held at London in 1895. Up to 1982, its headquarters was at London. Now it is at Geneva.
Administration:-
1. Membership and General Assembly:- National federations of membering countries are the members of
ICA. Representatives of these national federations constitute the general assembly. The maximum
representation form a country is 20.
2. Executive committee:- Executive committee elected from the General Assembly excises control over the
affairs of the alliance.
3. The director:- The secretariat of the Alliance is headed by the Director.

Objectives of ICA:-

1. To act as the global representative of co-operative organizations.

2. To give wide popularity for the co-operative principles and methods throughout the world.
3. To promote co-operation in all countries.
4. To safeguard the interest of the co-operative movement in all forms.
5. To act as an advisor, guide and mediator among the nations for various matters on co-operation.
6. To maintain friendly relations between its affiliated organisations.
7. To promote economic relations nationally and internationally between co-operatives organisations of all types.
8. To assist in the promotion of the economic and social progress of the people of all countries.

Activities of ICA:-

1. ICA conduct seminars at head office and regional offices. Expert in respective fields present papers and conduct
discussions.
2. Fellowships are offered for 6 months. At the end of this period, participants have to submit their thesis on their
topic. ICA allots guides for this purpose.
3. ICA maintains experts in different discipline for providing consultancy services to members.
4. On the Saturday of July each year, ICA co-ordinates the celebration of International co-operative day. The first
international co-operative day was celebrated on 1923.
5. ICA publish books on co-operation. It also publishes ICA bulletin, it is a quarterly publication.
6. It helps the member organisations on the matters of export and import of goods.

Principles of co-operation:-
Co-operative principles are the guideline for co-operative enterprise. The success of a co-operative institution depends
upon its degree of adherence to co-operative principles.

First stage Principle:-

Rochdale Pioneers formulated the principles of co-operation for the first time in 1884. It is known as first stage
principle. They are as follows:-

1. Open membership
 2. Democratic control
3. Limited interest on capital
4. Patronage dividend
5. Cash trading
6. Political religious neutrality
7. Promotion of education

Second Stage Principle:-

Then in 1937 ICA setup a committee to study the principles of Co-operation. The committee submitted its report
accepting the Rochdale principles with slight variation. They divided the first 4 principles as Primary or essential and the
last 3 principle as secondary or optional principles. These principles are known as second stage principles.

Primary principles:-

1. Open membership:- The membership of a co-operative society should be open to all. There should not be any
restrictions on the basis of religion, caste, politics, economic status..etc.
2. Democratic control:- The affairs of a co-operative society should be managed by members on democratic way.
‘One man one vote’ is the voting rule of co-operative societies.
3. Limited interest on share capital:- The primary objective of a co-operative society should be to serve the
members and not to earn profit.
4. Patronage dividend:- Profit of a co-operative society is called surplus. The surplus should be distributed among
the members in proportion to their dealings with the society.

Secondary Principles:-

1. Cash trading:- Cash & Carry should be followed by co-operative societies. That means credit sales should be
avoided.
2. Political religious neutrality:- There should be no discrimination on the basis of political religious grounds while
admitting or dealing with members. Political religious matters should be kept neutral.
3. Promotion of education:- Co-operative education is must to make aware the members about the importance of
co-operation, its benefits..etc. Every co-operative society must provide co-operative education to its members.

Third Stage Principles:-

In 1964, ICA appointed a commission to modify the principles of co-operation. Mr. D.G Karve from India was the
chairman of the commission. The commission submitted its report in 1966 and ICA accepted the principles. These
principles are known as reformulated co-operative principles. They are as follows:-

1. Voluntary and open membership:- The membership of a co-operative society should be open to all. There
should not be any restrictions on basis of religion, caste, politics, economic status..etc. The decision to become
a member in a co-operative society should be absolutely voluntary and there should not be any compulsion.
2. Democratic control:- The affairs of a co-operative society should be managed by members on democratic way.
‘One man one vote’ is the voting rule of co-operative societies.
3. Limited interest on share capital:- The primary objective of a co-operative society should be to serve its
members and not to earn profit.
4. Equitable distribution of surplus:- The surplus should be distributed among the members in proportion to their
dealings with the society
 5. Co-operative education:- Co-operative education is must to make aware the members about the importance of
co-operation, its benefits..etc. Every co-operative society must provide co-operative education to its members.
The major pillars of a co-operative society are its members, office bearers and public. All these people should
know the practices and principles of co-operation.
6. Co-operation among co-operatives:- The strength of co-operation will become infinite if there is a real co-
operation among co-operative. Only through this full benefits of co-operation can be realized. Karve committee
stressed the need for inter co-operative co-operation.

Fourth Stage Principles:-

From 1960s to 1995, so many changes took place in the world in terms of economic,, social, political and technological
areas. On this ground, ICA decided to revise co-operative principles. The executive committee of ICA directed Dr Ivan
Macpherson (of Canada) to review the principles in 1994. He submitted his report on 1995 and ICA accepted these
principles. These principles are known as IV stage principles/Redefined principles/existing principles. They are as
follows:-

1. Voluntary & Open membership:-. The membership of a co-operative society should be open to all. There
should not be any restrictions on basis of religion, caste, politics, economic status..etc. The decision to become
a member in a co-operative society should be absolutely voluntary and there should not be any compulsion.
2. Democratic member control:- The affairs of a co-operative society should be managed by members on
democratic way. ‘One man one vote’ is the voting rule of co-operative societies. By adding the word ‘member’
ICA stresses importance of members in control and management of a co-operative society.
3. Members economic participation:- ICA replaced the earlier principle ‘limited interest on capital’ with Members
economic participation. The ultimate aim of a co-operative society is the promotion of economic standard of its
members. To achieve this objective the economic participation of members is unavoidable.
4. Autonomy & Independence:- Co-operative societies should be autonomous and independent institutions.
General body should its supreme authority. But in practice various outside agencies controls co-operative
societies such as government, registrar..etc It is undesirable. ICA is strongly against this situation.
5. Education, training and information:- Co-operative education is must to make aware the members about the
importance of co-operation, its benefits..etc. Every co-operative society must provide co-operative education to
its members. Successful performance of co-operative business needs education, training and adequate and up
to date information. The members, the employees, managing committee and the public should have clear cut
awareness about the importance and impact of co-operative principles and practice.
6. Co-operation among co-operatives:- The strength of co-operation will become infinite if there is a real co-
operation among co-operative. Only through this full benefits of co-operation can be realized. Karve committee
stressed the need for inter co-operative co-operation.

Chapter 2

Different economic systems & Co-operation

Economic system:-
Totality of all systems and mechanisms for production and distribution of goods and services in an economy is
called economic system. There mainly four economic systems.
a. Capitalism
b. Socialism
c. Communism and
d. Co-operation
 I. Capitalism (Free market economy):- It is the oldest form of economic system. It was generated from
feudalism. It is an economic system in which business and industries are organized and carried on for profit
by private individuals with minimum interference of government.

Features of capitalism:-
1. Right of private property:- There is absolute freedom to acquire, use and transfer private property. There
is no legal social restriction to control private property.
2. Freedom of enterprise:- Freedom of enterprise involves three things
a. Freedom to start any business.
b. Freedom to own and use property.
c. Freedom of contract.
3. Consumer sovereignty:- Consumer under capitalism enjoys supreme powers. Goods and services are
produced according to the tastes and habits of consumers. Then only the producer can secure larger sales.
4. Market mechanism:- Market mechanism refers to the operation of the forces of demand and supply
without any interference. The market mechanism determines the price.
The price in turn provides the guideline for the producer on such issue what to produce, when to
produce, how to produce, how much to produce..etc Price also determines the consumption decisions.
5. Profit motive:- To make profit is the primary motive of entrepreneurial activity and not social commitment
or service.
6. Competition: - It is an essential feature of capitalistic economy. Producers compete for profit and market
share. Consumer compete to purchase quality goods and lowest price. Workers compete for their job. This
keeps the economy at its fullest efficiency.
7. Class conflict:- Capitalism gradually divides the society into two – haves and have nots. Class conflict
between capitalist and labor are bitter realities of capitalism.
8. Exploitation:- The main motive of capitalist is profit. They exploit labors and other resources for
maximizing profit.
9. Limited role of government:- In a capitalistic economy, government does not interfere in the conduct of
economic affairs of the country. Their role is limited to
a. Manage few public enterprises which can’t be left to private sector
b. Build and maintain common infrastructure and facilities for the economy
10. Economic inequalities:- An important feature of capitalism is the unequal distribution of income and
wealth. A few become very rich. While the majority are not able to meet day to day maintenance.

Advantages of capitalism:- 3. Class conflicts

4. Unequal distribution of income and wealth.
1. Automatic working.
5. Emergence of monopoly
2. High rate of capital formation. 6. Concentration of economic power.
3. Efficiency in production. 7. Evils of Exploitation.
4. Fast economic development and prosperity. 8. Discard humanity and dignity of labor
5. Optimum utilization of resources.
6. Chance of prosper the ablest.
7. Adaptability
8. Democracy in business.

Disadvantages of Capitalism:-
1. Human welfare is ignored.
2. Unhealthy competition
Comparison between Capitalism and Co-operation:-

Similarities:-

1. Both are economic systems.

2. Both allow private property.
3. Both have individual freedom and liberty.

Differences:-

Capitalism Co-operation

1. Based on self- interest and profit. 1. Based self- help and mutual help
2. Profit is the prime motive 2. Providing service for members is the prime
motive
3. Purely materialistic and no scope for 3. Based on the values such as self-reliance,
values dignity of labor, humanity..etc
4. Class conflict is unavoidable 4. Class conflicts are totally absent.
5. It is an association of capitalists 5. It is an association of individuals.
6. Exploitation is an essential feature 6. All members have equal rights. No scope for
Exploitation.
7. No concern for society 7. It works for betterment of society too.

II. Socialism (Centrally Planned Economy):- The concept of socialism was evolved from the evils of
capitalism.
Socialism is an economic system in which factors of production is owned by the state, formulates a
master plan for the allocation and usage of resources, the benefit of which is equally distributed among
all members of the economy.
Features of socialism:-
1. Collective ownership:- Private ownership of factors of production is abolished in
socialism. As per socialism all the factors of production are under the ownership of
the state or government. (This ensures equal opportunities to all)
2. Specific goals:- Socialistic economies have specific goals. These goals are
mentioned in the constitution of the country itself. Generally, It includes growth
with social justice, achievement of self- sufficiency..etc
3. Planning:- The essential feature of socialism is the presence of centralized planning
for optimum utilization of country’s resources.( The planning authority, after
surveying the country’s resources and needs of people fixes priorities and
formulates plans)
4. Minor role of market and price mechanism:- As the government conducts all the
economic activities, the price mechanism does not have much significance.
5. Absence of class system:- Under socialism, there is no class system or class
conflicts. The state is the employer and all the citizens are employees.
6. Economic equality:- Under socialism, state ensures equal distribution of income
and wealth in the economy.
Comparison between Socialism and Co-operation:-

Similarities:-
1. Both are economic systems.
2. Both ensures equal opportunities to all
3. Both avoids class system and class conflicts.
4. Both evades profit motive and exploitation.

Differences.

Socialism Co-operation

1. It is a revolutionary concept 1. It is an evolutionary concept.

2. It discards private property 2. It allows private property.
3. Doesn’t recognize the individual 3. It recognize individual freedom of action.
freedom of action
4. It not voluntary 4. It is voluntary.
5. Presumption of domination of the 5. Co-operatives are autonomous.
the state.
6. State is the supreme authority 6. Members are the supreme authority.

Communism:- Communism is the product of Marxian philosophy contained in the books of Communist Manifest
(1948) and Das Capital (1884). It is an advanced and revolutionary form of socialism.

Features of Communism:-

1. Revolutionary methods:- Communism is an extreme form of socialism. It uses even revolutionary methods
(bloodshed, violence) to secure welfare of the state.
2. All other features of socialism are common in communism.

Comparison between communism and Co-operation:-

Similarities:-

1. Both are two forms of economic system.

2. Both are economic systems.
3. Both ensures equal opportunities to all
4. Both avoids class system and class conflicts.
5. Both evades profit motive and exploitation.

Communism:- Co-operation

1. There is an element of compulsion 1. Co-operatives are voluntary association of

Individuals. There is no compulsion.
2. It uses revolutionary means to secure
Welfare of the state. 2. It doesn’t believe in revolutionary means. It
uses only democratic means.
3. It also a political system 3. It is only a form economy or economic organization.
4. It can’t co-exist with other economic
Systems. 4. Co-operation can work under all types of economic
Systems.
Chapter 3 Classification of Co-operative Societies
Co-operative societies can be classified on basis of their structure and functions they are performed

Classification on the basis of structure:-

On the basis of structure, co-operative societies can be classified into to two. They are

a. Primary Co-operative societies:- These are co-operatives functioning among the common people at villages.
Eg:- Primary co-operative credit societies, Primary marketing societies..etc
b. Secondary Societies:- Secondary co-operative societies are district level and state level co-operative
societies.
District level co-operative societies are also called Central co-operative societies. They control primary
societies. Eg:- District Co-operative Bank, District Whole sale stores..etc Secondary societies working state
level is called State Co-operative societies. They are also called Apex Co-operative societies. They co-
ordinate and control district co-operative societies under them.

On the basis of function co-operative societies can be classified into

a. Agricultural Credit Societies:- Eg:- Primary agricultural credit societies, District co-operative bank, State co-
operative bank, Agricultural and Rural development Banks
b. Non Agricultural Credit Societies:- Eg;- Urban banks, Industrial Co-operative Banks, Employee Societies..etc
c. Agricultural Non Credit Societies:- Eg:- Marketing co-operative societies, Processing Co-operative Socities.
d. Non Agricultural Non Credit Societies:- Eg:- Consumer Co-operative Societies, Industrial Co-operative
Societies.

Three tier system of Co-operative Credit:-

In India, co-operative credit societies are working under three tier structure. Primary credit societies at the base,
Central c-operative Bank in the middle and the State Co-operative Bank at the apex form the three tier.

Why do the co-operative credit should follow three structure or Three tier VS Two tier

There are some who think that there is no need for the middle tier (Central or District level). According to them it is
possible to eliminate this agency and reduce the rate of interest. If the middle tier is eliminated the following
situations will emerge.

1. It is difficult to establish the same intimacy and constant relationship between a primary society and the
State Co-operative Bank as between primary society and district co-operative bank.
2. The primary credit societies cannot have the same voice and control in the management of State Co-
operative Banks that district co-operative banks now have.
3. The distance between the apex bank and the primary societies may lead to lack of co-ordination.
4. A district is regarded as the unit for planning and administration in the country. Therefore, district level
institution are better suited in co-operative field also.
5. District Banks play an important role in balancing financial resources of primary societies. It facilitates
balanced growth of co-operatives in the district.
6. If the district banks are abolished, the State Co-operative bank will have to establish its branches at district
level. It means that the expenditure at present borne by the district bank on staff will have to be met by
apex bank. So district bank do not increase expenditure.
 7. If district banks are abolished it will reduce the present influence and talents for collection of deposits and
recovery of loans.
8. The direct approach by the primary societies of Apex Bank would create various administrative difficulties
and will cause delay in advancing loans.
9. The co-operative credit is a controlled credit. It is needed to guide, supervise and control this credit. It is
possible only with help of District banks.

Classification of co-operative credit:-

Based on the purpose and period of credit, co-operative credit can be classified into three categories:-

1. Short term credit:- It also called production advance. It is granted normally for a period of 18 months. It is
intend for meeting seasonal agricultural needs such as purchase of seed, manure, insecticides and
conducting harvest..etc. The loan is to be repaid after harvest on installments. Security is anticipated crops.
2. Medium-term Loans:- These are also known as development loan. The duration of the loan is 3 years and in
certain case it is granted for 5 years. It is granted for repairing well, purchase of cattle, construction of cattle
sheds..etc.
3. Long term loans:- These loans are granted for a period of 5 to 15 years. Objective of this type of loan is to
make some permanent improvement on land such as reclamation of land, repayment of old debt, digging
wells or construction of irrigation canals. For giving loan term loan there are separate co-operative
institutions. They are called co-operative land development banks or mortgage banks.

Co-operative Agricultural Credit Structure:-

Co-operative Agricultural Credit has three tier Structure. They are as follows:-

1. Primary Agricultural Credit Society:- In the village level, there are primary credit societies having only
individual as its members. Their primary function is the creation of fund to be lend to members. The
soundness of 3 tier credit structure depends upon the primary credit society. Primary agricultural credit
societies are known by different names such small sized societies, multipurpose societies, large sized
societies, service co-operative societies, farmers societies…etc
2. District Co-operative Banks:- District co-operative societies function in the district level. Usually primary
societies are its members. The main aim of the district co-operative bank is to give loan and other financial
help to membering societies. It also acts as balancing center of credit.
3. State Co-operative Banks:- It is the highest body in the co-operative credit structure. It is the federation of
all credit co-operatives in a state. The main responsibility of state co-operative bank is to provide credit to
the district co-operatives and supervise their working. It also co-ordinate and control their workings.

Chapter 4 TYPES OF PRIMARY CO-OPERATIVE CREDIT SOCIETIES

In this area we are discussing various types of Primary agricultural co-operative credit societies. There are different
kinds of primary agricultural co-operative credit societies such as Small sized societies, multipurpose societies,
service societies, farmers societies..etc. Actually these societies were developed on a sequence from 1904 to 1972.

Small sized societies:-

These are the first type of primary co-operative societies in India. These societies were begun to be
established soon after the passing of co-operative credit societies act 1904. They were set up on the
Raiffeisen model with unlimited liability and small area of operation. The main objectives of this society
were

1. To raise funds for granting loans to members

2. To promote the spirit self -help and mutual help.
3. To promote saving habit among members

Membership :- Membership is open to all residing within the area of operation and having attained an age
of 18 with good character..
Problems of Small sized societies:-

1. Their profits were meager and they could not afford to appoint office staffs.
2. Only a few of them had a full time secretary or even an office.
3. They could collect very little funds.
4. Their borrowing limits were inadequate.

The small sized primary co-operative agricultural credit societies were remained more or less lending institutions. They
couldn’t solve the many sided problems faced by agriculturists. To solve the multi sided problems of farmers a new form
of co-operative society was emerged. That was Multi-purpose co-operative societies.

Multipurpose Co-operative Societies (MPCS):-

These societies served not only the credit needs of members but also made arrangements to distribute agricultural
inputs, to market the products of agriculturists, to undertake processing activities..etc

Functions of Multipurpose societies:-

1. To advance loans to agriculture

2. To act as an agent for the sale of crops to nearest co-operative marketing societies.
3. To supply agricultural inputs such as manure, seeds, pesticides, agricultural equipments..etc
4. To supply essential consumer goods such as sugar, kerosene, salt..etc
5. To serve as a milk collecting station of the nearest diary.
6. To encourage subsidiary occupations of its members.

Evaluation of multipurpose societies (Limitations) :-

1. There was progress in the number of MPACs but in terms of volume operation, it was very poor.
2. In most of these societies noncredit functions did not extend beyond the distribution of controlled goods.
3. The multisided problem of agriculturists reminded unfulfilled.

The Rural Credit Survey Committee, after a long research came into the conclusion that village societies would not
succeed without a large area of operation, sufficient working capital, employment of better trained personal and the
support from the state. The committee recommended the formation of large sized society.

Large sized Credit Society:-

It is co-operative credit society with member ranging from 300 to 500 and covering a group of villiages. As per the
Rural Credit Survey Committee, the following are the essential feature of such societies:-

1. These societies are to be organized covering a 6. The society should follow crop loan system.
group of villages. 7. To meet the consumptions needs of members
2. These society should have larger membership (marriage, construction of house, funeral
and adequate share capital. expenses..etc) should be met out of chity funds.
3. The head quarter of the society should be 8. The society should make effective link between
conveniently selected for the people of villages. marketing societies.
4. Liability of members should be limited. 9. Should appoint full time paid secretaries.
5. The state should participate in the share capital 10. Should attract deposits and reduce its
of these societies. dependence of borrowed capital.
The performance of large sized societies was impressive. They were relatively far better than small sized societies. They
were well ahead over small sized societies not only in respect of volume of deposits and disbursement of loans but also
in terms of other business operations.

In 1958, the National Development Council passed a series of resolutions, some of them were contrary to the main
recommendation of Rural Credit Survey Committee. The Council considered that for the development of co-operation
as people’s movement, it should be organized on the basis of village as primary unit. In a co-operative society its
members should have intimate knowledge of one another. On the basis of these recommendation a new type of
primary agricultural co-operative society was formed. It was Service co-operative society.

Service Co-operative Society/Bank:-

As per Ministry of Community Development and Co-operation, Government of India, “ A Service Co-operative is an
organisations of villagers who have willingly combined for mutual help and co-operation in meeting their common
economic requirement and in increasing agricultural production”

Area of operation:- As per the resolution of NDC, the area of operation of service co-operatives should be according to
the following conditions:-

1. Based on village as primary unit.

2. Area within 3 or 4 miles from the head quarter of the village.
3. Should not exceed 3000 population or 600 families.

Membership and liability of members:- membership is open to all agriculturists including agricultural labors and
artisans residing in the area operation and having attained the age of majority. The state government can also become a
member. Liability of members is limited.

Objectives:-

1. To provide short term, medium term loans for agricultural purpose.

2. To arrange the supply of farm requirements such as improved varieties of seeds, fertilizers, insecticides..etc.
3. To maintain and supply costly agricultural implements on hire.
4. To provide essential consumer goods.
5. To raise funds by way of deposits from members and non- members.
6. To arrange the marketing of agricultural produce of the members.
7. To supervise the utilization of loan and to recover the loan in time.
8. To arrange storage facilities for the produce of members

Funds:-

1. Share capital 4. Loans and advances from DCB, KSCB..etc

2. Reserves and surplus 5. Loans grants, subsidies form government
3. Deposits from member and non members
Management:- The general body is the ultimate authority. General body elects a managing committee to manage the
day to day affairs. It consists of 7 to 15 members. Two seats are for woman a member belonging to SC/ST respectively.
The managing committee shall elect a president, vice president and other office bearers.

Functions:-
 1. Issue of loans:-
a. Agricultural short term, medium term loans.
b. Self-employment loan.
c. Consumption loans
d. Industrial loans
e. Vehicle loans
2. Supply of farm requirements.
3. Marketing of agricultural products
4. Provides storage facilities.
5. Banking business
6. Developmental activities.

Problems:-

1. Mounting of over dues.

2. Lack of professional management
3. Political and bureaucratic interference on the day to day functioning.
4. Inadequate loan recovery system.
5. Lack of knowledge on proper utilization of funds.
6. Instability of agricultural based economy.

Suggestions for improvement:-

1. Effective implementation of crop loan system.

2. Timely action against defaulter and reduce over dues.
3. Professionalization of management.
4. Effective and profitable employment of funds.
5. Effective and timely audit and inspection
6. Reduce political interference on the operation.

At last in 1972 upon the recommendation of National Commission of Agriculture, another primary co-operative society
was introduced. It was Farmers service society.

The concept of farmer’s service society was first suggested by the National Commission on Agriculture in 1972. The
commission conducted a survey and found the followings

1. The existing credit institution in rural areas had failed to take care the small farmers and agricultural labors in
the matter of credit.
2. These credit are not easily accessible by them.
3. There is a considerable delay in advancing credit.
On the basis of these recommendations The central government constituted a study group headed by Sri T.A
Pai. They recommended another form primary agricultural co-operative society called farmers service society.

Farmer’s Service Society:-

It is form of primary co-operative agricultural credit society recommended by the study group headed by Sri. T.A Pai.
The essential features of this society are as follows:-
 1. It is intended to serve an area with a population of 20,000, where no other credit society should function.
2. Big, small and marginal farmers as well as agricultural laborers can be members of the society
3. Two third of board of directors should be members from weaker sections of the society.
4. The society should mobilize the savings of the people by promoting saving habit.
5. It can provide not only short term and medium term loans but also loans.
6. Farmers service society should provide loans for subsidiary occupation of members such as poultry, cottage
industries..etc.
7. It should distribute farm requisites and consumer goods to members.
8. It should undertake the marketing and processing of agricultural produce.
9. The society should have a qualified and competent managing director. The appointment of MD must be in
consultation with District Co-operative Bank and from managerial cadre maintained by the district co-operative
banks.
10. The society should have its own technical personnel for extension service (For giving consultations to members
on diary, poultry..etc if the society is not able afford him initially, the government should depute them at free
service basis)

Difference between Service Co-operative Society and Farmers Service Co-operative Society

Service Co-operative Society Farmer’s Service Co-operative Society

1. Area of operation is limited to an area 1. Area operation is more wide to cover a

having population of 3000 and 600 families population of 20,000
2. Besides agriculturists and agricultural 2. Only agriculturist and agricultural labors are
Labors artisans are admitted as members admitted as members.
3. Any member can be elected to managing 3. Two third of board of director should be
Committee from weaker sections of the society.
4. It provides only short and medium term 4. In addition to short and medium term loans,
loans. It provides long term loans also.
5. It does not provide loans to subsidiary 5. It provides loans to subsidiary occupations of
Occupations of members occupations of members.

Defects of Primary Agricultural Societies:-

1. Most of the primary agricultural societies are non -viable because of their poor membership and inadequate
working capital.
2. Growth of these societies has not been uniform throughout the country. The proportion of rural people covered
by these societies differs from state to state.
3. The volume of loan supplied these societies are inadequate.
4. Most of the societies have not patterned their loan policies in accordance with crop loan system.
5. There is an inordinate delay in disbursement of loans by these societies.
6. There is no satisfactory arrangement for supervision over the proper utilization of loans.
7. These societies are not being able to inculcate the habit thrift among the members.
8. Another major problem of these societies is that they have ignored the needs of small farmers.
9. Domination of political interference has adversely affected the operational efficiency of these societies.
Differences between Co-operative Banks Commercial Banks.

Commercial Banks Co-operative Banks

1. Joint stock Companies 1. Co-operative organisations.

2. Governed by Banking regulation Act 2. Governed by Co-operative Societies Act
3. Subject to the control of RBI 3. Subject to the control RBI and Co-operative
Registrar
4. Offers wide variety of services 4. Comparatively lesser services are offered.
Follows large scale banking 5. Many of them operates in small area and follows unit
adopting the system of unit banking.
5. Serves mostly the credit needs of 6. Serves the credit needs of agriculturist.
trade, industry and commerce
6. Comparatively lower interest rates 7. Slightly higher rate of interest.
7. Borrower have no control over
lending policy of the bank 8. As borrowers are share shareholders, they
have a control over lending policy of the firm.

Chapter 5 District Co-operative Bank

A District or Central Co-operative Bank is federation of the primary credit societies with in a revenue district. It is the
middle tier in the co-operative credit structure. In kerala there 14 central co-operative bank at present.

Area of operation:- Area of operation normally will be a revenue district.

Membership:- Primary co-operative credit societies working in the area of operation and government can become
members in district co-operatives.

Liability of members:- Limited to the number of shares held.

Objectives of District Co-operative Bank:-

1. To provide loans to affiliated co-operative societies.

2. To act as balancing center of resources.
3. To arrange the supervision and control of the affiliated societies.
4. To raise deposits from members and nonmembers
5. To convene conferences of member societies and Prescribe uniform procedure for working.
6. To open branches at important places with the permission of co-operative registrar.
7. To maintain and utilize subsidiary partnership fund.
8. To undertake all other activities incidental to the above objectives.

Funds of District Co-operative Banks:-

1. Share capital
2. Deposits from members and nonmembers.
3. Reserve and surplus
 4. Loans from state co-operative bank

Type of share:-

Two class of share are issued by DCB, they are:-

1. A Class share of Rs100 are issued for membering societies

2. B Class hare of Rs1000 are issued to Governments.

Management:-

1. General Body:- Ultimate authority of the society is its general body. One delegate from each affiliated societies
will form general body.
2. Board of Management:- To manage the day to day affairs the society has a Board of management. The board of
management consists of three categories of members. They are:-
✓ Delegates from member societies.
✓ Two government nominees.
✓ One nominee from the Kerala State Co-operative Bank.
3. Executive Committee:- For the prompt transaction of business, the Board of Management delegates some of its
powers and functions to an Executive Committee. Apart from president, vice president two elected members
constitute the Executive Committee.
4. The General Manager is the chief executive of the bank and is responsible for the day to day administration of
bank.

Functions of District Co-operative Bank:-

1. Provision of loans to primary credit co-operative societies:-

a. Short term loans under crop loan system.
b. Medium term loan for the installation of pump sets, soil conservation, purchase of animals, digging of wells,
ponds..etc
c. Medium term loans for rubber development betel vine cultivation, pepper development, coconut
development, minor irrigation, biogas…ec
d. Non -agricultural loans for meeting non- agricultural needs.
e. Industrial loan under IDBI scheme.
f. Fertilizer loans for conducting manure depots.
g. Cash credit for the procurement and supply for ration and controlled goods.
h. Special cash credit for conducting festival markets.
2. Helps to other types of co-operatives:-
a. Loans to handloom co-operatives for procurement and marketing activities.
b. Loans to coir co-operatives for working capital requirements.
c. Cash credit to consumer co-operatives
d. Cash credit to marketing co-operatives.
e. Financial assistance to diary co-operatives.
f. Loans and cash credit to industrial co-operatives.
3. Financial assistance to Individuals:-
a. Gold loans.
b. Hire purchase loans to purchase household appliances and two wheelers.
c. Cash credit to traders and small business man.
 d. Self -employment loans to doctors, engineers, advocates..etc
e. Loans or purchasing new vehicles such as auto rickshaw, mini trucks..etc
f. Industrial loans.
g. Over draft facilities.
4. Other banking functions:-
a. Accepting deposits from members and nonmembers.
b. Collection of checks, drafts..etc
c. Discounting of bill of exchange.
d. Safe custody o valuables.

Problems faced by District Co-operative Bank:-

1. Deposit mobilization:- They are not efficient in deposit mobilization. Because, commercial banks dominate
both in urban and rural areas. The management of central co-operative banks is not as efficient as that of
commercial banks. Another important fact that majority of deposits of central banks are from the primary co-
operative credit societies.
2. Complicated process of advancing loans:- The process off advancing loans from the bank to the societies is very
complex. Primary co-operative societies have to complete many formalities get loan.
3. Overdues:- Over dues by borrowers are another important problem faced district co-operative societies. It
affects the profitability and financial soundness of the DCBs.
4. Financial management:- The financial management of primary societies are not much efficient. Besides they
can’t provide adequate assistance, guidance and leadership to develop capacities of primary societies.

The need to retain District Co-operative societies in the Three Tier Structure.

1. It is difficult to establish the same intimacy and constant relationship between a primary society and the State
Co-operative Bank as between primary society and district co-operative bank.
2. The primary credit societies cannot have the same voice and control in the management of State Co-operative
Banks as they have in the District Co-operative Bank at present.
3. The distance between the apex bank and the primary societies may lead to lack of co-ordination.
4. A district is regarded as the unit for planning and administration in the country. Therefore, district level
institutions are better suited in co-operative field also.
5. District Bank plays an important role in balancing financial resources of primary societies. It facilitates balanced
growth of co-operatives in the district.
6. If the district banks are abolished, the State Co-operative bank will have to establish its branches at district level.
It means that the expenditure at present borne by the district bank on staff will have to be met by apex bank.
So district bank do not increase expenditure.
7. If district banks are abolished it will reduce the influence and talents for collection of deposits and recovery of
loans.
8. The direct approach by the primary societies of Apex Bank would create various administrative difficulties and
will cause delay in advancing loans.
9. The co-operative credit is a controlled credit. It is needed to guide, supervise and control this credit. It is
possible only with help of District banks.
 10. The DCB will be highly helpful in the promotion and development of other types of co-operatives institutions in
the districts. This may be difficult when the present pattern is changed.
11. Deposits may be mobilized in a better way by the DCBs in each district rather than the apex bank with its
headquarters at the state capital.

Chapter 6 State Co-operative Bank:-

The State Co-operative Bank is the federation of all co-operative credit societies working in state. It stands at the top
of the credit structure. It co-ordinates and controls all the district banks in the state. It is the connecting link between
NABARD , state government and other credit institutions.

Kerala State Co-operative Bank Ltd (KSCB):-

The bank registered was originally registered as Trivandrum Central Co-operative Bank on 1915 and started functioning
in 1916. Later in 1943 the bank was converted into “The Travancore Central Co-operative Bank” with a federal character
for the entire state of Travancore. After the independence of india, the states of Cochin and Travancore was merged
and Travancore –Cochin state was formed. Consequently the bank was again renamed as “State Co-operative Bank” On
1st November 1956 when Kerala was formed it was again renamed as “Kerala State Co-operative Bank”

From 1st 1966, KSCB was brought under the control of RBI and in 1972 RBI issued license to KSCB for doing banking
business. It is the only schedule bank in Kerala under co-operative sector.

Role of Kerala State Co-operative Bank:-

1. As a The leader of co-operative credit structure:- It is the apex bank of short term and medium term credit
structure in Kerala. It guides, supervise, co-ordinates all the 14 District Co-operatives and all primary agricultural
co-operatives.
2. As the lender of last resort:- It acts as lender of last resort to DCBs. Besides this it extend direct credit to
individuals. It provides short term, medium term and long term credit as their requirements. It also acts as a
balancing center of credit.
3. As a retail banker:- RBI has approved it as scheduled bank. Therefore it performs the banking functions as per
the banking regulation act. It is doing the basic banking functions such as accepting deposit, lending loans,
collection of cheques, drafts..etc.

Objectives:-

1. To serve the apex co-operative bank for the state.

2. To finance DCBs, state level co-operative federation and other co-operative institutions.
3. To raise deposits from members and nonmembers.
4. To open branches at suitable places in the state with the permission of RBI.
5. To receive money on current, saving, and fixed accounts to carry general banking business.
6. To lend money to individual against the securities of fixed deposits receipts, government securities and other
securities.
7. To receive valuable for safe custody.
8. To arrange the supervision and inspection of DCBs and other co-operatives under it.
9. To serve as a balancing center of co-operative credit.
 10. To promote the economic interest of members of the bank in accordance with co-operative principles.
11. To do other works for incidental for the above objectives.

Membership & Liability of members :- The membership of KSCB is to open to all DCBs and the state government. The
liability of members is limited.

Management:-

The general body is the supreme authority. The management of the bank is vested in the Board of Directors subject the
general control of the general body. The executive management of the bank is vested in executive committee. The
composition of various bodies are as follows:-

1. General Body:- Includes directors of district co-operative bank, Ex-officio directors and directors nominated by
government.
2. Board of Directors:- All representative of district co-operative bank (one from each bank) four nominees of
state government, the registrar of co-operatives societies and the managing director.
3. Executive Committee:- The president, Vice President, Registrar of co-operatives societies, the Managing
Director and Directors elected from the members on the Board.

Functions of KSCB:-

1. Issue of agricultural short term, medium term loans.

2. Advance to subsidiary activities of agriculture like poultry, diary, fishery..etc
3. Financial assistance to DCB for undertaking the credit needs of urban bank and employees societies.
4. Finance to production, marketing activities of handloom, coir, fisheries, diary and village industries.
5. Provides fund to DCBs for financing production, marketing of primary co-operatives.
6. Provides finance to all other co-operative federations in the state.
7. Provides financial assistance to co-operative spinning mills, co-operative hospitals..etc
8. Accepting deposits of all types including NRE
9. Maintains agricultural credit stabilization fund at the state level.
10. Conducts statutory inspections of co-operatives under banking regulation act.
11. Convenes conferences periodically to discuss the problems of DCBs and finds solutions.
12. Provides a forum for discussing matters relating to the working of different types co-operatives.

Chapter 7 Organisations under Long Term Credit Structure

State Co-operative Agriculture and Rural Development Bank (SCARDB):-

It is the federation of Primary Agricultural and Rural Development Banks (PARDBs) in the state. It is also the financing
bank of all Primary Agricultural and Rural development Banks.

Membership of these societies composed of Primary Land Development Banks. But in a few states individuals are also
permitted to be members. SCARDB acts performs such functions such as arranging proper supervision and guidance of
PARDBs, acting as an intermediary between RBI and long term credit institutions, preventing farmers from mortgaging
their land with greedy money lenders..etc

Kerala State Co-operative Agricultural And Rural Development Bank (KSARDB):-

It is the apex federation of primary Co-operative Agricultural and Rural Development Bank in Kerala. It was registered
on 4th October 1956 and started functioning on 1st November 1956. The headquarter of the bank is at Trivandrum. The
area of operation of the bank extends to entire state of Kerala.

Membership and Share Capital:-

The membership of the bank is open all PARDBs, State government, KSEB and South Vayanad Girijan joint farming co-
operative society.

Objectives:-

1. To finance PARDBs affiliated to it.

2. To finance South Wayanad Girijan Joint Farming Co-operative society.
3. To refinance for the energisation of pump setts to KSEB as member of the bank
4. To establish branch offices or sub offices to facilitate its business.
5. To receive deposits and borrow funds from other institutions.
6. To inspect the PARDBs and give necessary guide lines for their smooth workings.
7. To do all other things incidental or conducive to the attainment of the above objectives.

Funds:-

1. Share capital 4. Deposits

2. Reserve fund 5. Loans from NABARD, SBT, KSCB SBI and from
3. Debentures and Bonds State government.
Management:- Management of the bank is carried on by the general body and Board of Directors. General body
consists of one delegate from each of the affiliated PARDBS, Government nominees and exofficio directors of the board.

For day to administration twenty four members Managing Committee shall be constituted. The board members elect a
President, Vice president from among themselves.

Functions:-

1. The bank advances 6 types of long term loan to farmers through PARDBs. They are as follows:-
a. Ordinary loan:- These loans are issued for a period of 15 years. These loans are generally issued for leveling
bounding and reclamation of land, soil conservation, minor irrigation programmes, purchase of
machineries..etc
b. Scheme loan:-. It is for preparing plantations, land development, animal husbandry, horticulture,
sericulture...etc Period of loan may extend 20 years.
c. Non- farm sector loan:- Under this type of loan, NABARD has identified 22 groups of cottage and small scale
industries. These loans are given to individual artisans, craftsman, small entrepreneurs..etc Loan upto
50,000 is given against the personal security and above of which is given against the mortgage of land..
d. Rural housing loan:- These loans are issued for the construction and purchase of new house.
e. Small road transport operation loan:- It is issued for purchasing transport vehichle up to the 80% its cost.
f. Integrated loan:- Small scale industries approved by development commissioner are eligible for getting up
to Rs20 lakh under this scheme.
Problems faced by land development banks:-

1. Inordinate delay in getting loans:- A major criticism against agricultural development bank is the inordinate
delay in giving loans to its members. It is said that ordinarily it takes two or three months from the date of
application.
2. Raising overdues:- The overdues in many of the PARDBS are very high. Overdues in PARDBS is 26%. The
position at all India level is still worse, as it comes to 45%.
3. Procedure in getting loan:- The procedure by which loans sanctioned is very complex and time consuming.
4. Reduction in the annual disbursement of loan:- There is a trend of reduction in the total disbursement of loans
by PARDBS for the last few years. This is due to stiff completion that they are facing from the commercial banks
in the field.

Chapter 8 National Bank For Agriculture And Rural Development

The Government of India set up National Bank for Agriculture and Rural Development (NABARD) by a special Act of
the parliament and it started functioning on 12th July 1982. The main objective of NABARD is to provide credit for the
promotion of agriculture, small scale industries, handicrafts and allied economic activities in rural areas.

History of NABARD:-

India is an agricultural country. Its central bank has a special responsibility in providing credit to the agricultural sector.
Since the inception it has realized this obligation and formed a separate Department called ‘Agricultural Credit
Department’ for the promotion of agriculture and rural credit. It provided various types of financial assistance to co-
operative credit institutions dealing in agricultural credit.

Later in the wake of independence, the inadequacy of long term credit institutions for agriculture was deeply felt.
Various committees also emphasized the need and importance of such institutions. But RBI was not in a position to
take up these additional functions. Because its hands were already full of statutory obligations. Realizing this situation
government set up an institution for this purpose. It was Agricultural Refinance Development Corporation in 1963. It
used to give long term financial assistance to SADBs and State Co-operative Banks.

The third stage in the evolution was reached when the necessity for integration of the functions of these two agencies
was felt. This was reason for the birth of NABARD. But the immediate reason for the establishment of NABARD was
CRAFTICARD report. CRAFTICARD stands for Committee to Review the Arrangement for Institutional Credit for
Agriculture and Rural Development. It was a committee constituted by RBI in 1979 under the chairmanship of B.
Sivaraman. On of the outstanding recommendations of the committee was the establishment of NABARD.

Objectives:-

1. To co-ordinate the operations of all agencies which are engaged in rural credit.
2. To maintain an expert staff to study all question relating to agriculture and rural development
3. To give consultation to Central, State governments and institutions engaged in rural credit.
4. To act as an agent for Central and State Government and RBI for the flotation of their debentures and bonds.
 5. To arrange training in agriculture and rural development.
6. To conduct research and surveys.

Funds of NABARD:-

1. NABARD’s initial capital of Rs 100 crores was contributed by RBI and Central government in 50: 50 ratio.
2. The bank is authorized to raise futher funds by way of debentures and bonds with guarantee of central
government.
3. It can receive loans for a period not exceeding 18 months form RBI
4. With prior sanction of RBI, it can receive loans from Central Government or any financial institution approved by
it.
5. With the prior sanction of RBI, it can accept fixed deposits for a period not exceeding one year for Central
Government or any institution approved by it.
6. With the prior sanction of RBI, the bank is authorized to receive foreign exchange loans.
7. Under NABARD 3 funds are created for the promotion of agriculture and rural development They are:-
a. National Rural Credit Long term Operation Fund:- This fund has been created by transferring the amount
from the similar fund maintained by RBI. Besides this, The central government , state governments and RBI
are adding to this time to time.
b. National Rural Credit Stabilization Fund:- This fund has been created by transferring the amount from the
similar fund maintained by RBI. Besides this, The central government and state governments are
contributing to this year by year.
c. Research Development Fund:- This fund has been setup by the grants and contribution as well as allocation
from the net profit of the bank. This fund will be utilized for agricultural and rural development and also for
conducting research.

Management:-

The management of the bank will be vested in the Board of Directors consisting of 15 members constituted as follows:-

a. Chairman d. 1 representative having long experience in

b. 2 representatives of rural economics, rural commercial banking.
development, cottage, small scale industries e. 3 nominees of RBI
and handicrafts. f. 3 nominees of central government.
c. 2 representatives having long experience in co- g. 2 officials of state governments.
operative banking. h. A Managing director.

Chairman of the bank is appointed by the Government of India in consultation with RBI. Managing Director will
be appointed by the Government of India in consultation with Board of Directors.

Role of NABARD in the development of Co-operative Movement in India.

NABARD has a vital role in the development of co-operative movement in India. Its measures are basically a
continuation of the RBI measures. These measures can be broadly divided into two:-

1. Provision of finance
2. Building up of co-operative credit structure.

Provision of Finance:-
All the NABARD’s finance provided to co-operative sector is through the State Co-operative Banks (SCBs). About 90%
goes to agriculture. These finance of four types. They are as follows:-

a. Short term agricultural finance:- This is primarily for meeting seasonal agricultural operations and also to
animal husbandry and allied activities.
b. Medium term agricultural finance:- The NABARD provides medium term loans to SCBs for a period of 3 to 5
years. These loans are provided for two purposes:-
(i) For purchase of agricultural machinery, repair of wells, animal husbandry, poultry farming..etc
(ii) For converting short-term loans to medium term loans (Whenever a wide-spread crop failure as result of
drought, floods ..etc)
c. Long term agricultural finance:- Long term loans are provided mainly through investment in debenture of
SLDBs. All these loans are provided at a concessional rate which is less than 3% of normal bank rate.
d. Non -agricultural Finance:- NABARD provides short term loans for the production and marketing activities of
selected cottage and small scale industries (mainly handloom weaver’s co-operative societies.

Building up of Co-operative Credit Structure:-

The following are major steps taken by the NABARD (earlier RBI) to build up a sound co-operative credit structure:-

1. It established SCBs in those states where it was not setup

2. It took necessary steps to strengthen the weak SCBs
3. It rehabilitated the weak District Co-operative Banks by recovery of its overdues and improving its administrative
and supervisory mechanisms.
4. It made arrangements for training of personal of co-operative departments.
5. It conducts supervision and inspection of the SCBs and CCBs
6. It established a new fund called rural infrastructural development fund with government. This can be utilized for
strengthening the weak co-operative societies.

Chapter 9 Non Agricultural Credit Socie ties.

Co-operative Urban Banks:-
Co-operative urban banks are formed mainly for the purpose of providing cheap credit to the people residing in the
urban and semi urban area. The members are mostly traders, artisan, professionals and salary earners. An urban bank
provides short term and medium term loans to its members for non- agricultural purposes.

Area of operation:- The area of operation of urban banks will be specified in the by law of the bank. Usually the area is
restricted to a town municipality, corporation or a taluk. In certain cases it may extend to a district.

Membership and Liability:- All non -agriculturist like small traders, merchants, salary earners, professional and artisans
residing in the area of operation. Liability of all members is limited.

Objectives:-

1. To encourage thrift, self-help and co-operation among members.

2. Receive deposit from members and non-member
3. To advance loans to members at reasonable rate of interest.
4. To carry general banking business.
 5. To extend all help for development of business of cottage and small scale industries.
6. To arrange safe custody of valuables.
7. To act as an agent for joint purchase of domestic and other requirement of the members.
8. To provide financial and technical assistance for self -employed persons for setting up their own business.
9. To grant and issue of credit, travelers cheques and circular notes.
10. To undertake any other function which are incidental or conducive for the attainment of above objectives.

Funds:-

1. Share capital
2. Reserves and surplus
3. Deposits form members and non-members.
4. Borrowing from DCB, KSCB, RBI and IDBI.

Functions or Urban co-operative banks:-

1. Accepting deposits from members and non-members:- Accepting deposits is the main function of an urban
bank. It maintains all types of deposit accounts such as Fixed deposits, saving bank deposits, current deposits,
recurring deposit..etc
2. Advancing loans:- The next main function is to advance loans to its members. Loans are granted for the
following purposes.
a. Working capital for trade and business.
b. Construction and repair of houses.
c. To meet educational expenses.
d. To meet ceremonial expenses.
e. To meet consumption purposes.
f. To discharge prior debts.
g. For self -employed persons and professionals.
3. General banking business:- Urban bank undertakes most of the banking activities such as collection of cheques,
demand drafts, discounting of bill of exchange, safe custody of valuables..etc

The loans are granted for a period not exceeding 3 years and against the security of fixed deposits, land property,
government securities, insurance policies, gold..etc

Employee Credit societies:-

These societies are organized among the salaried employees and fixed wage earners of Government departments, quasi
government institutions, private undertakings..etc. These societies are also called ‘Salary earners society’. The main
objectives of this society are

1. To promote thrift and savings among the employees and to provide

2. To meet the credit needs of members.

Features:-

1. Membership is open to only confirmed employees.

2. The maximum borrowing limit is fixed on the basis of basic pay of employees.
3. The loans advanced to the members are deducted from their monthly salaries.
 4. The area of operation is normally confined to a department or an institution. In rare cases it may extend to a
district.

Personal loans:-

Personal loans are the loans given by employees co-operative societies against the personal security of a member. The
loan is given against the salary of an employee. This loan is meant for meeting the emergency needs of the members.

Problem faced by employee co-operative societies:-

1. Against the objective of the society, the easy availability of credit has encouraged extravagance (lavishness)
among members.
2. On account of the inflationary trends in the economy, the members have started regular borrowing from the
bank.
Co-operative Housing Societies
Co-operative housing societies are organized to solve the housing problems of persons belonging to low and middle
income groups. These societies are mostly formed in urban areas. They are formed either for securing the ownership of
a house or for obtaining accommodation at fair and reasonable rent.

Need and Importance:-

1. Increasing population needs large number of houses.

2. Increase in the number of micro families necessitates increased number of houses.
3. Co-operative housing can reduce construction cost and make the houses affordable to low income groups.
4. Co-operative housing can reduce the price and usage of building materials.
5. Developed house construction technique can be effectively used in this sector.

Primary Housing Societies:-

Housing co-operative societies organized in municipal, semi urban and rural areas with individual as its members are
called primary housing societies. Its area of operation is confined to one municipal town or one block or one taluk. The
society is organized with the objective of advancing long term loans for construction, purchase of new houses or repair
of existing houses.

The major source of fund is from Kerala State Co-operative Housing Federation (HOUSEFED). The general body is the
final authority in all matters. For day to day management there is a seven or nine member managing committee. From
this committee a president, a vice president, secretary and chief executive of the society is to be elected.

Functions of primary housing societies:-

The society provides long term loans to its members for construction or purchase new houses or for repair and
alteration of existing house. The maximum amount of loan is 5 lakh or 80% of cost of construction or 36 times of the
monthly income of the borrower whichever is less. Loans are given on the security of the site belonging to the
borrower. The loan is given in three installments. It is to be repaid in equal monthly installment for a period over 20
years.
Kerala State Co-operative Housing Federation (HOUSEFED):-

It is the apex society of all primary housing societies in Kerala. It started functioning in 1979. Its headquarter is at
Kochi. It is organized with objectives of :-

1. Provide long term loan to membering societies.

2. To undertake the manufacturing of building materials and
3. To carry on trade of them for the benefit of its members.

Its membership is open to all primary housing societies and the state government. It mobilize its fund from the
borrowings form HDFC, LIC, HUDCO and NHB. Its management is vested in 22 member Board of Directors including a
president and vice president.

Function:-

1. Raising of funds:- The main function of the federation is to raise funds to grant loans. It raises funds from the
borrowings from LIC, HUDCO, HDFC and NHB. Its major portion borrowings is done form LIC.
2. Granting of long term loans:- The next important function is to grant loans to affiliated societies on their
applications. The loans are given in three installments of 30%, 40% and 30%.

Advantages of Housing societies:-

1. Housing societies can reduce the cost of house construction by:-

a. Large scale preparation of architecture planning.
b. Economies of large scale purchase of building materials.
c. Employing men and equipments fully.
d. Eliminating the speculators
2. Co-operative housing can reduce construction cost and make the houses affordable to low income groups.
3. Developed house construction technique can be effectively used in this sector.
4. They can avail the service of specialist in the construction fields.

Types of housing societies:-

1. Co-operative Building Societies:- These societies obtain loans from financing institutions or from government
which is repayable in 20 years and lend to members for construction of houses. Thus they are long term credit
agencies for housing.
2. Co-operative House Building Societies:- These societies undertake the construction of houses on behalf of their
members (as an agent) They acquires land and construct houses on colony basis, giving sufficient space for
roads, gardens, playgrounds, shops..etc The object is not only economies in cost of construction but also secure
the service of expert technical staffs.
3. Co-operative House Construction Societies:- They acquire sties, construct houses and rent them to members
on the hire purchase system. The tenant member becoming ultimate owner after payment of installments for a
period of 20 years. Each member should remit one fifth of the total cost of land and building in cash as initial
payment.
4. Tenancy Housing Co-operative Society:- This type of society acquires land and construct houses according to its
plan. The houses so constructed are allotted to members on rental basis. The member will remain as tenants
forever paying fixed rent. The relationship between the society and the member is that of house owner and
tenant. But it avoids exploitation in traditional tenancy contracts.
 5. Co-operative Township:- These are generally formed on the outskirts of congested towns. The society builds
townships with all facilities such as schools, hospital, parks, drainage, sewage, water supply electricity..etc. The
plots are either sold or hired.

Problems of Housing Societies:-

1. Weak financial base of co-operatives.

2. High elasticity in the prices of building materials.
3. Creation of artificial scarcity in the supply of building material.
4. Subletting of house units by members which create serious difficulty.
5. Non availability of land, especially in town areas.
6. Failure of members to repay the installments.
7. Co-ordination difficulty by apex society due multiplicity of housing societies.

Chapter 10 Consumer Co-operatives

The co-operative movement itself was originated as consumer movement. Consumer societies are formed by the
consumers belonging to low and middle income groups to ensure the supply of pure and unadultered consumer goods
at reasonable prices. Rodchdale Equitable Pioneers Society was the first consumer Co-operative Institution in the world.
In India, Triplicane Urban Co-operative Society in Madras (1904) was the first consumer co-operative.

Objectives of consumer societies:-

1. To supply better quality goods to consumers at reasonable prices.

2. To avoid malpractices like adulteration, hoarding, black marketing..etc
3. To avoid the exploitation by intermediaries.
4. To hold down the prices of consumer goods in the economy.
5. To supply goods with correct weights and measures.

Structure of Consumer Co-operatives in India.

The structure of consumer co-operatives in India is of four tiered. It is as follows:-

a. At the bottom level :- Primary Consumer Co-operative Society.

b. At district level :- District Wholesale Consumer Stores
c. At State level :- State Co-operative Consumer Federation.
d. At National level:- National Co-operative Consumer Federation.

Primary Co-operative Consumer Stores:-

Co-operative societies with individuals as its members organized for procuring goods in bulk quantities and distribute
them at reasonable prices to members and general public are called primary co-operative consumer stores.

Area of operation & Membership:- One or two wards in a municipality or a few wards in panchayath. Sometimes it
may extend to a whole panchayath. The correct area of operation is fixed as per its bye law. Anyone who is residing
within the area of operation of the stores can become a member.

Funds:-
 1. Share capital
2. Reserves and surplus
3. Loans or cash credit form DCBs
4. Deposits from members and non- members.
5. Trade deposits
6. Loans from Governments.

Management:- General body is the ultimate authority in a primary consumer stores. From the general body, they elect
a Board of directors for managing its business. Normally it is 7 to 15.

Objectives:-

1. To purchase the goods in bulk quantities and sell them at reasonable price to members and general publics.
2. To eliminate the middlemen and unnecessary practices in the market.
3. To attract prospective members by offering reduced prices and purchase bonus.
4. To act as an agent of the government for distribution of essential commodities.
5. To take steps to stabilize the prices of consumer goods in the open market.
6. To propagate the co-operative principles and practices among the whole society.
7. To open branches or sales depots wherever necessary with in the area of operation.

District Wholesale consumer Stores:-

These are the district level organisations of primary co-operatives. Its area of operation is confined to one revenue
district. Its membership is opened to all primary consumer stores with in the area of operation and state government.

Funds:-

1. Share capital
2. Reserves and surplus
3. Loans or cash credit form DCBs
4. Deposits from members and non- members.
5. Trade deposits.
6. Loans from Governments

Objectives:-

1. To make arrangement s for the purchase of consumer goods supply them to affiliated societies at reasonable
price.
2. To act as an agent of government for distribution of essential and controlled goods.
3. To setup manufacturing and processing units for consumer goods.
4. To open branches wherever necessary for the distribution of consumer goods.
5. To co-ordinate and the working of affiliated societies.
6. To provide after sale service for goods sold.
7. To arrange conferences and business meetings.
Kerala State Co-operative Consumer Federation (CONSUMERFED)

It is the federation of all marketing co-operatives of Kerala;. It was established in the year 1965. Its headquarter is at
Kochi. It is organized with object of coordinating and facilitating the working of wholesale stores and to assist the
promotion, organization and development of consumer co-operatives in the state.

Area of operation & membership:- The area of operation of CONSUMERFED extends to the whole state of Kerala. 14
District wholesale co-operatives and the state government are its members. Its 99% of share capital is contributed by
Kerala government.

Objectives:-

1. To make bulk purchase of consumer goods and supply them to affiliated wholesale stores.
2. To make arrangement for proper storage, grading, packing and transportation of consumer goods.
3. To establish and operate manufacturing and processing units for consumer goods.
4. To open retail branches wherever necessary.
5. To act as an agent for the government for the procurement of consumer goods either through local purchase or
by import.
6. To assist, develop and co-ordinate the consumer stores in the state
7. To undertake propaganda and publicity regarding the consumer co-operative movement.

Management:- The ultimate authority is the general body, which consists of one delegate each from the affiliated
district wholesale stores, Government nominees and a managing director. Management of the federation is vested
with the Board of Directors. The members of general body and managing committee are the same. So there is no
question of electing Board of Directors.

Working of Consumer FED (Business Operations):-

The federation has been transacting its business through the following business divisions:-

1. Triveni Department stores:- Triveni Department Stores were started by the federation in 1975 for retail
distribution of consumer goods at reasonable price. At present there are 232 Triveni stores in Kerala including
142 mobile Triveni units, 7 floating Triveni Super Stores.
2. Nanma Stores:- This project is introduced for the benefit of poor and downtrodden category of the society. As
per this scheme, 10 items of essential commodities (Aatta, Maida, Rava..etc) are given at subsidized rate
through the network of 2300 retail outlets. Other items are sold at the rate of 10% below the market rate.
3. Neethi Medical Stores:- On 1st November 1998, the federation started “Neethi Medical Stores” with the
assistance of Government of Kerala. This scheme intends to put a control over the rise in prices of medicines.
From this store medicines are available at a price less by 18% to 70% of the MRP.
4. Neethi Gas Scheme:- This scheme was implemented by the federation jointly with government of Kerala during
the year 1998 at Palakkad, when a shortage for cooking gas was felt. Accordingly new LPG connection are
provided to consumer through Neethi Stores and also high quality gas whenever needed.
5. Foreign Liquor Division:- Due to the change in the liquor policy of Government during the year 2001 – 02, the
federation has started foreign liquor business. Now it has 40 foreign liquor shops and three beer parlors.
6. Triveni Note Book Division:- The federation undertakes the production and Marketing of Notebooks under the
brand name of “Triveni”
7. Federation has also started a unit for the distribution of purified drinking water with the brand name of “Sabari”
 8. Curry Power Unit:- The federation has started a curry power manufacturing unit and market it under the brand
name of “Triveni hurri curry”

National Co-operative Consumers Federation (NCCF):-

The national Co-operative Consumers Federation is an apex organisations of the consumer co-operatives in the country.
All the state federation are affiliated to the NCCF. It was organized in 1965. Its headquarter is at New Delhi and it has
branches in Mumbai, Chennai, Calcutta, Guhavati, Nagpur and Kochi.

Objectives:-

1. To assist and facilitate the working of consumer co-operatives in the country.

2. To establish trade connection with the traders and manufacturers of consumer goods.
3. To promote and supervise export and import activities.
4. To set up consultancy and promotional cells.
5. To undertake publicity and propaganda for the development of consumer movement.
6. Co-ordination of co-operative consumer sector.
7. To publish magazines and other materials.

Working (Functions) of NCCF:-

1. Its main function is to provide supply and support to its member societies for distribution of consumer goods at
reasonable rates.
2. It procures textiles from reputed mills and arranges for their distribution to membering societies.
3. It renders technical guidance and assistances to member societies in the field of packaging, standardization, bulk
buying, pricing..etc
4. It also provides consultancy and promotional services to consumer co-operatives.
5. It publishes a monthly journal “Indian Consumer Co-operator” occasionally publishes pamphlets, book lets..etc

Need and Importance of Consumer Co-operatives:-

1. It eliminates intermediaries and reduces the cost of consumer goods.

2. It helps to wipeout malpractices by intermediaries such as adulteration, black marketing, hoarding,..etc.
3. To helps to stabilize and hold down the price of consumer goods.
4. To ensures the supply of quality goods at reasonable price to consumers.
5. It can help the government to wipeout irregularities in the market.

Chapter 11 Marketing Co-operatives

These are co-operative societies formed by farmers, artisans and small producers to market their products. They
undertake all the marketing activities such as transportation, storage, standardization, grading..etc Apart from
marketing activities they also undertake processing o commodities to reach the market.

Need and Importance of marketing societies:-

1. Marketing co-operatives eliminates the middleman and reduces the cost of farmers and small producers.
2. They act as a commission agent to market the commodities of farmers and small producers.
 3. They helps to wipeout the malpractices by middlemen such as hoarding, black marketing, adulteration..etc
4. They help to stabilize the product prices.
5. Grading and standardization facility provided by marketing co-operatives helps to ensure quality of products.
6. The operation of marketing co-operatives benefit to consumers and consumer co-operatives.
7. It provides farmers marketing services such as transportation, storage, packaging..etc
8. It avoids distress sale by farmers by providing transportation, storage and advance payments.
9. It saves the farmers from the exploitations of marketing intermediaries.
10. It ensures reasonable price for producers and farmers.

Business operation of marketing co-operatives (Functions):-

1. Commission business:- Here the marketing co-operative society acts a commission agent. It receives the
products produced by farmers and small produces and arranges common bid for its sales. The goods are sold to
the highest bidder. Society pays the amount to farmers after deducting a small commission for their service.
2. Advance against stock:- In countries like India farmers are very poor. They cannot wait for a long time to
encash their products. (If the price is too low) The marketing co-operatives helps them paying advance and
enables them stock their produce till the price becomes favorable.
3. Pooling:- Pooling refers to a process by which the farmers produce is physically assembled and sold as one lot
instead of selling on individual basis. Here the farmers get the benefit of bulk sales.
4. Standardization & Grading:- Grading and standardization facilities provided by marketing societies helps to
ensure quality of products. Standardization is the process of fixing standards for the products. Grading is the
process of grouping products into different grades according to different standards.
5. Processing:- It is the process of converting the agricultural produce into saleable conditions. Marketing co-
operatives undertake processing operations also.
6. Procurement:- In some cases, government declares minimum support price for certain agricultural products
and procure them. Marketing societies acts an agent of the government to procure agricultural products.
7. Supply of inputs to agriculture:- Marketing co-operatives provides seeds, fertilizers for co-operatives. This for
better farming.
8. Distribution of consumer goods:- In those areas where consumer co-operative s doesn’t exist, the marketing
society supplies essential goods like sugar, kerosene, rice, wheat..etc
9. Provision of services:- marketing co-operatives renders services such as transportation, storage..etc.

Structure of Marketing Co-operatives:-

The organisation structure of co-operative marketing societies differs from state to state. The general pattern in the
country is two tier structure with primary societies at the base and State Co-operative Marketing federation at state
level. Besides at national level, there is a national level federation for marketing co-operatives. But in some states,
there is regional or district level federations. Although, in Kerala, two tier structure is followed.

Primary Co-operative Marketing Societies:-

Primary co-operative marketing societies are co-operative institutions formed in villages as individuals are its members.
These are formed for helping the members to market their products more profitable than through private trade. They
also provide various fields of marketing services and inputs which farmers need on favorable terms.

The first marketing co-operative society was organized in Bombay province at Hubli in the year 1915. The area of
operation of primary societies is limited to one or more than one taluk. This is specified in the byelaw.
Objectives:-

1. To arrange the marketing of members produce to their best advantage.

2. To make advances to members on their produce.
3. To arrange storage for agricultural produce of the members.
4. To provide facilities such as processing, grading, pooling, and packaging to ensure quality and better price of
members produce.
5. To act as an agent of the government for the procurement of food grains and other commodities.
6. To ensure saving habit, mutual help and co-operation among members.
7. To perform other function incidental or conducive to the attainment of the above objectives.

Kerala State Co-operative Marketing Federation (MARKETFED):-

It is the apex institution of the marketing co-operatives in the state. It was established in in the year 1960 with head
quarter at Calicut. Later it was shifted Kochi. Its membership is open to all primary marketing and processing societies.
State government is also eligible for taking membership.

Objectives:-

1. To arrange for the purchase, marketing and sale of agricultural products of its affiliated societies to their best
advantage.
2. To own or rent godowns, open sales depots and branch offices to facilitate the purchase, storage and sale of
agricultural products.
3. To purchase and distribute fertilisers, seeds, insecticides and other agricultural inputs.
4. To establish processing units and sales depots for the profitable marketing of the produce.
5. To undertake market research and provide market intelligence regarding various agricultural produces.
6. To undertake interstate trade, import and export of agricultural produce, farm requirements and consumer
goods.
7. To raise fund by loans, grants and other contribution from government of Kerala, State Co-operative Bank,
SBI..etc
8. To encourage self- help, thrift and co-operation among the members of affiliated societies.

Function of MARKETFED:-

1. 1. Market the products of member societies throughout India and outside India.
2. Construction of godowns and grading of products.
3. Distribute produce loan to members.
4. Provide transportation facilities to its membering societies.
5. Store agricultural produce as an agent of the government.
6. Perform official obligations as the apex organisation of all marketing co-operatives in the state.
7. It has obtained the monopoly distribution of fertilisers produced by IFCO and KRIBHCO. It distributes fertilisers
through its large network of co-operative societies.

National Agricultural Co-operative Marketing Federaton of India (NAFED) :-

It is a national organisation of the state level co-operative marketing federations in India. It co-ordinates the activities of
the state federation and render advice and technical guidance to them. It was established in 1958 with head quarter at
New Delhi.
Functions:-

1. As an agent of the government, NAFED plays the role to stabilize the price of agricultural produce.
2. It supply essential commodities by an effective distribution channel.
3. The federation has also set up fruit and vegetable processing units, cold storage and godowns with the financial
assistance from NCDC.
4. NAFED is a piloting agency of the government for undertaking export of agricultural commodities procured by
state level federations.
5. NAFED provides technical and promotional support and guidance to its affiliated societies on
a. Organisation.
b. Finance
c. Installation and running of processing units.
d. Market intelligence.
e. Grading and standardization.
6. It has a high level committee to consider the matters to strengthen the primary societies in the country.
7. NAFED has undertaken expansion activities of internal trade, export trade, removal of regional imbalance,
expansion of storage, processing and development of promotional and training programmes.

Problems of Marketing Co-operatives:-

1. The farmers are indifferent to take membership in marketing co-operatives.

2. The co-operatives do not have adequate knowledge about the volume of agricultural produce that they can
handle.
3. Gap between primary and state marketing federation due to poor linkage.
4. Unhealthy competition with credit societies.
5. Favoritism, corruption, mismanagement of managing committees.
6. Negligence of processing function.
7. Inefficient supervisory machinery.
8. Lack of sufficient working capital.

Measures required to improve the working of Marketing societies :-

1. For removing unnecessary and unhealthy competition between marketing and credit societies an effective
relationship must be established.
2. All the primary marketing societies should be members of the state marketing federation so that they can avail
benefits provided by the state federation.
3. Marketing societies must use the expert opinion for grading, standardization..et so that it will create confidence
among the members.
4. The government must provide adequate finance for meeting working capital requirements of marketing co-
operatives.
5. The government both state and central, must help them societies to build proper storage places.
6. The societies should develop to offer new services to its members.
7. The marketing federation should develop a clear cut strategy for the development of its member societies.
8. The co-operative principles should be widely published among the farmers.
 Chapter 12

Industrial Co-operatives
Industrial co-operative societies are formed by small producers and artisans and craftsmen to undertake small scale and
cottage industries, on co-operative basis. These are also known as producer’s co-operatives. They are formed with the
object of eliminating the capitalist class from the system of industrial production and to reap the advantage of large
scale operation.

Need & Importance (Advantages) of Industrial Co-operatives:-

1. It helps for the capital formation to small scale industrialists.

2. It helps them to enjoy the benefit of large scale production
3. It saves them from the exploitation of capitalists.
4. It eliminates competition among members.
5. It helps them to avail various grants and subsidies provided by the government.
6. It helps them to market their goods.
7. It helps them to collect the needed raw materials.
8. It cultivates a habit of thrift, self- help and co-operation among members.

Objectives of industrial co-operatives:-

1. To provide employment opportunities.

2. To save skilled workers from the exploitation of capitalist industrialists.
3. To promote small scale and cottage industries.
4. To increase production by avoiding strikes and lockouts.
5. To establish labor participation in management.
6. Starting industries in backward regions.
7. Uplift the weaker sections of the society by providing employment.

Kinds of Industrial Co-operatives in India.

The following are the major Industrial Co-operatives in India

1. Handloom industrial societies. 4. Diary co-operatives.

2. Handicrafts societies. 5. Fisheries co-operatives.
3. Coir societies. 6. Poultry co-operatives.
Handloom Weavers co-operative Societies:-

The handloom industry is next to agriculture in India. About ten million weavers find employment in this industry. One
of the important points in this industry is that lakhs of weavers engaged in this industry have no alternative source of
livelihood. Handloom industries are formed to provide financial and technical assistance to weavers and strengthen
their bargaining powers.

Objectives of handloom industries:-

1. To purchase raw materials in bulk and supply it among the members.

 2. To purchase for common or hire improved tools and equipments to members.
3. To arrange for the sale of the finished products to the best advantage of the members.
4. To provide technical assistance to members in producing goods of improved and attractive designs.
5. To provide common service such as dyeing, printing and bleaching.
6. To encourage self -help, thrift and mutual aid among the members.
7. To act as an agent for the joint purchase of domestic requirement of its members.

Functions :-

1. Primary society purchases yarn in bulk quantity and supply it to the members on their demand.
2. Members are directed to produce cloths according to the specification and standards prescribed by the society.
3. Society collects the products of members and pays wages on piece rates.
4. Society provides technical assistance to their members in producing improved designs.
5. Some of the societies have established centers for providing common services such as dying, printing,
bleaching..etc

Funds:- Like any other co-operative institution hand loom co-operatives need sufficient funds for their operations.
The major sources of funds are:-

1. Share capital
2. Loans from NABARD
3. Loans from District Co-operative Banks.

In addition to this there are two funds associated with handloom co-operatives. They are:-

1. Cess Fund:- In 1953, the Government of India decided to levy additional exercise duty on textile mills, for the
purpose of developing handloom industries. The fund thus created is known as Cess Fund. This is used for the
following purposes:-
1. Encouraging the handloom industry.
2. To make improvement in handloom production.
3. To conduct research in the field of handloom.
4. For the maintenance of training institute in handloom sector.
5. To promote market for hand loom products.

2. Thrift fund:- Thrift funds are formed by handloom co-operatives for capital formation. 6% of wages of every
member is deducted and credited to a separate account to form this account. At the end of the year this
amount is converted into shares and credited to share capital of respective member.

Kerala State Handloom Weavers Co-operative Scoiety (HANTEX):-

Kerala State Handloom Weavers Co-operative Society was established in 1961 with headquarters at
Thiruvanthapuram. The area of operation of the society is the entire state of Kerala. It is an apex federation of
Primary Handloom Weavers Co-operative Societies. Its membership is open to all primary handloom weavers
co-operatives and co-operative spinning mills working with in the State of Kerala.

Objectives:-
 1. To organize the handloom industry with sound commercial base to market handloom products with in the
state and also outside the state.
2. To raise necessary resource by the issue of shares and by making borrowing from financial institution or
others.
3. To purchase raw materials and other requisites necessary for the industry and sell them to the affiliated
societies.
4. To grant advances to societies.
5. To purchase and hire improved appliances required for the handloom industry.
6. To purchase the products of membering societies and arrange its marketing.
7. To establish and run sales depots for the exhibition and sales of hand loom products of membering societies.
8. To provide technical assistance to affiliated societies.
9. To provide research, developments and training facilities.

Constitution and Management of HANTEX:-

1. The ultimate authority of the HANTEX shall vest in the general body. The general body consists of one delegate
from each affiliated societies and one representative of the Government.
2. The day to day management of the society shall vest in a Board of Directors consisting of 19 members including
a president and a vice president.
3. An 8 member executive committee is also constituted for immediate management.

Problems of Handloom industry:-

1. Problem of raw material supply 4. Problem of marketing.

2. Competition from textile mills and power 5. High rate of interest of borrowing.
looms. 6. Managerial inefficiency.
3. In adequate working capital. 7. Technical improvement and processing.
Assistance provided by the government to Handloom Co-operatives:-

1. Societies were given share capital loan at 75% of the share amount for a period of 2 years.
2. Government is providing interest free working capital for a period of 2 years.
3. Government is also providing loan and grants up to Rs 15,000 for setting up dye house.
4. For encouraging thrift deposit, government is granting 6% of the thrift deposit amount
5. For setting up power loom, government provides special grants.
6. Managerial subsidy for secretary or supervisor is granted for three years ( 100% for first year, 66.66% second
year and 33.33% for the third year)
7. Government issues direction to hospitals, offices and others to purchase handloom cloth for its requirements.

Handi Crafts Societies:-

These are societies formed by wood carvers, ivory workers, horn workers, metal engravers, stone carvers, gold smith,
toy makers..etc. These societies are assisted by All India Handi Crafts Board. The Board provides loan and grant to the
societies and organizes publicity campaigns.

Coir Co-operatives:-
Coir industry is the most important traditional industry in Kerala. It provides employment opportunities to lakhs of
people. Coir industries are organized on co-operative basis to avoid the exploitation of middlemen and capitalists. It
also aims to prevent adulteration and other unhealthy practices which lead to falling the demand for coir products.

Structure of Coir Co-operatives in Kerala:-

Coir co-operative s in our state is functioning on two tier system. At base level primary coir co-operatives are
functioning. They federate at state level to form Kerala State Co-operative Coir Marketing Federation.

Primary Coir Vyavasaya Co-operative Societies:-

Primary coir co-operatives are organized in areas where there is a concentration of coir workers and retting facilities are
available. Their area of operation is limited to a one or two wards of a panjayath. All coir workers engaged in retting of
husk, conversion of husk into fibre, coir spinning..etc can become a member to the society.

Functions of Primary Coir Vyavsaya Co-operative Societies:-

1. The society purchases raw material (coconut husk) in large quantities and at wholesale prices.
2. These husks are retted in retting yard for fixed period.
3. Retted husks are distributed to members to produce coir.
4. The society collects the coir produced by the members and pays them at piece rate.

Kerala State Co-operative Coir Marketing Federation (COIRFED):-

It is an apex society of all types of primary coir co-operatives working in the state of Kerala. The COIRFED was registered
in the year 1979 with headquarter at Alappuzha. Its area of operation extend `to the whole state of Kerala. Its
membership is open to all coir vyavasaya Co-operative societies, coir mats and matting societies, husk retting societies
and state government.

Objectives:-

1. To purchase coir yarn or coir products produced by the member societies.

2. To arrange the marketing of coir products produced by the member societies.
3. To establish research centers for diversification of the coir products.
4. To undertake the retting of husk, production of fiber and other coir products.
5. To raise funds by way of loans and grants from government, NCDC, NABARD, KSCB..etc
6. To act as an agent of the government for the collection of coir yarn and other products under distress purchase
scheme.
7. To encourage self- help, thrift and co-operation among the affiliated societies and their members.

Management:-

1. The final authority of the Apex Federation shall vest in the general body. The general body consists of one
delegate from each of the member societies.
2. The management of the federation is vested in a director board of 23 members. Managing director is the chief
executive of the federation.
3. Seven member executive committee is also constituted for the immediate management.
Functions of the COIRFED:-

1. In order to provide timely assistance to affiliated primary societies, it has opened four regional offices at Kollam,
Alappuzha, Cochin and Kozhikode.
2. It maintains godowns at important centers in the state and provides storage facility to its members products.
3. It has opened show rooms at different parts of the country to increase sales. Three mobile showrooms are also
functioning in the state.
4. It has appointed agents throughout the country to enhance sales of coir products.
5. It conducts trade fairs and exhibitions in connection with propaganda and publicity of coir products.
6. It has opened stalls in trade fairs and exhibitions conducted by local bodies or government for increasing sales
and find new markets for its products.
7. It operates raw material banks with assistance of the state government and NABARD.
8. It maintains “Technical Consultancy and promotional Cell” to provide technical assistance and know-how to
member societies.
9. It has established an export division to ensure the exporting quality of the product.
10. A distress purchase scheme is implemented by it in order to protect the interests of small producers.

Types of Coir Societies:-

1. Husk Retting Societies:- These societies purchase coconut husk in bulk quantities at whole prices. They
supply it to members on their demand. Society collects members products and pays wages on piece rate
system.
2. Coir Rope Manufacturing Societies:- These are also factory type societies organized for the production of
coir ropes. Society arranges necessary tools, appliances and raw materials for the production of coir ropes
under the roof of a factory. Society provides specification of the coir ropes based on customer orders.
Members are paid wages.
3. Coir Mats and Matting Societies:- These are factory type societies organized for the production of coir mats,
carpets..etc Some of them are big factories, employing 200 to 300 workers. Most of the production of these
societies are export oriented.
4. Co-operative Coir Bristle Societies:- These societies are of cottage industrial type and are working in interior
places where there no retting facilities. These societies are engaged in the production of coir fiber out of
unretted husks.

Problems of Coir Co-operatives:-

1. Marketing problems: - The coir products do not get market. Consequently the dead stock being accumulated
in the go down is a serious problem.
2. Working capital problems:- Poor sales and dead stocks lead to severe problems of working capital.
3. Competition from other states:- The states like Tamilnadu and Karnataka have entered in the coir industry.
They are entering with full mechanization. So they can sell at reduced rate. It reduces the competitiveness of
our products.
4. Inadequate retting facilities:- Inadequacy of retting facilities is another problem faced by these societies.

COIR Board:- Coir board is a statutory organisation formed by Central Government. This is for the promotion and
development of the coir industry in the country. It initiates exports of coir products. It also takes initiatives to keep a
good price by fixing floor price for the products. It also appoints dealers to increase the sales and market of coir
products.

Chapter 13

Miscellaneous Co-operatives:-
Scheduled Caste and Scheduled Tribe Co-operatives:-
These are formed in village levels. Generally a single village or a part of village or an NES block is taken as the area of
operation of the society. The membership of these societies is open only to person belonging to these communities.

Objectives:-

1. To prepare and implement schemes for welfare of Scheduled castes and Scheduled tribes.
2. To arrange for the supply of farm requirements such as seeds, fertilizers, agricultural implements.
3. To provide essential consumer goods to members.
4. To encourage traditional cottage industries and handicrafts
5. To arrange for the production, processing and marketing of minor forest produce of the members for fetching
higher prices.
6. To provide housing accommodation to the members.
7. To organize and conduct nursery schools.

Funds:-

1. Share capital from members and government.

2. Loans from district co-operative bank
3. Reserve & surplus

Management:- The management of the societies is vested in the general body and the managing committee. Usually
the managing committee consists of 8 members including one woman representative. The first committee will be
nominated by the Registrar of co-operative societies, of which 4 members will be officials of the various government
departments. The nominated committee can hold office only for a period of six months.

Government helps:-

1. State partnership:- The government subscribes shares in the SC and ST societies in the ratio of 1:25 based on
the shares subscribed by the individual members up to a ceiling or Rs 1 lakh.
2. Share Capital Grant:- Person taking shares in these societies are granted 90% of the value of the shares by way
of grants subject to a maximum or Rs 25 per members. Therefore members have to pay only one Rupee
towards the value of shares.
3. Grant for the purchase of land and construction of building.
4. Interest subsidy for the loans:- Full interest will be granted by the government to loans issued by the society to
its members. Only members, who have repaid 25% loans, are eligible to get interest subsidy.
 5. Free service of Government Officers:- In order to ensure the efficient working of SC & ST co-operatives, the
government extend the free service of an officer not below the rank of a junior inspector of co-operative
societies.
6. Managerial grant:- For the first five years, managerial grant for meeting establishment charges will be given to
the society on a sliding scale. On first year 100%, the next year 75% and 60% for the last year.
7. Working capital loan for employment oriented scheme

Kerala State Federation of Sheduled Caste and Sheduled Tribe Development Co-operative Limited.

It is a state level federation set up by the Government in 1981 for the effective and coordinated development of SC and
ST co-operative societies. Its head quarter is at Trivandrum.

Membership:- Membership is open to the primary SC and ST societies in the State and the Central Government,
Scheduled Caste, Scheduled Tribe Development Corporation.

Objects:-

1. To provide loans and other types of help to affiliated primary societies.

2. To procure and distribute raw materials, tools and machinery to its members.
3. To procure thing produced by the member societies and to arrange the sales.
4. To collect, process and market minor forest produce.
5. To prepare and implement schemes for the welfare of Scheduled Caste and Scheduled Tribe.
6. To provide help for the development of cottage industries, handicrafts..etc run by the members.
7. To help the member societies to take up employment oriented schemes.
8. To co-ordinate the help provided by the various agencies and departments for the welfare of Scheduled castes
and Scheduled Tribes.

Management:-

The federation has a general body and a board of directors. The board of directors consists of the following members.

1. One representative each of SC & ST Co-operatives from every revenue district.

2. Chief Conservator, Forest Department.
3. Registrar of Co-operative Societies.
4. Director of the Harijan Welfare Department.
5. Director, Tribal Welfare Department.
6. Agricultural Production Commissioner.
7. Managing director (Addl Registrar of Co-operative Societies)

Indian Farmer’s Fertilizer Co-operative Limited (IFFCO):-

IFCO is the largest fertilizer manufacturing company in India. It was registered on 3rd Novemeber 1967 under the Multi
State Co-operative Societies Act, with head quarters at new Delhi. The object of IFFCO is to promote the economic
interest of its members by undertaking the manufacture and sale of chemical fertilizers. Its area operation extends to
whole India.

Krishak Bharath Co-operative Society Limited (KRIBHCO):-

KRIBHCO started functioning from 1980. It was promoted by IFFCO. It is registered under Multi-State Co-operative
Societies Act. It mainly produces Urea and Ammonia. Its area of operation extends to whole India.

Objectives:-

1. To become self-sufficient in the fertilizer requirements of the country.

2. To reduce import of fertilizer and save foreign exchange every year.
3. To popularize the new technology of dry farming among the farmers.
4. To increase agricultural productivity.
5. To bring provide employment to large number of people directly and indirectly in the country.

Chatper 14

Co-operative education & Training

The Rochdale pioneers while formulating the principles for the successful conduct of their consumer stores had
recognized the importance of co-operative education. ICA while formulating the principles of co-operation realized it as
an unequal principle.

Co-operative education refers to all those activities intended to improve the knowledge and understanding of member
and general public about co-operative principles and practices. It makes the members more competent in their trade
and occupation.

Need and Importance of co-operative education & Training:-

1. Today all business organization works in highly competitive market. For survival and growth every organization
needs to improve its efficiency. The situation of co-operative business is not different. Co-operative education
& training is needed to improve the efficiency of co-operatives.
2. In our present economic environment, co-operative societies offer diversified activities. Trained manpower is
needed to undertake these activities. Co-operative education and training is needed to develop such a man
power.
3. Co-operative societies need leaders on all its three tire system. To develop such leaders co-operative education
and training is necessary.
4. Co-operation is democratic movement. In order to develop it as a people’s movement, its members should be
aware of their rights and obligations. For this, co-operative education is needed.
5. All operations of co-operatives are conducted by its officials and staff. In order enable them to conduct their
duties efficiently; they must be given proper training and education.

Structure of co-operative education in India.

National co-operative Union of India (NCUI) is the pilot and apex agency to promote all co-operative educational and
training programs in co-operation. It is also the direct responsible agency to all State co-operative Unions.
National co-operative Union of India (NCUI):-

National Co-operative Union of India (NCUI) is the apex organization representing the entire co-operative institution in
the country. It was established in 1929. It is headquartered at New Delhi.

The membership of NCUI is extended to all the State Co-operative Unions, state level and national level co-operative
federations, The government of India and RBI.

Functions of NCUI:-

1. The NCUI promotes NCCT and NCCE which co-ordinate co-operative training and education throughout the
country.
2. NCUI provides sufficient support for research, promotion and development of co-operative education.
3. It acts a national spokesman of co-operative movement in India.
4. It celebrates co-operative weak in India.
5. It publishes two publications on Co-operation. They are “Indian Co-operative Review” and The Co-operation”.
6. It convenes and holds national co-operative congress, seminars, meetings and conferences..etc
7. It preserves the democratic character of co-operative institutions.
8. It provides advises, assistance to all co-operative institutions in India.
9. It represents India in ICA
10. It promotes international co-operative relations through active collaboration in ICA, UNO, FAO, ILO…etc.

The NCUI has set up two separate institutions for conducting co-operative education and training throughout the
country. They are:- (a). NCCE and (b).NCCT

National Centre for Co-operative Education (NCCE):-

NCCE was established in 1956 as a subsidiary to NCUI. It is the apex institution for conducting co-operative education in
the country. The main function of NCCE is to provide training and education to trainers of co-operation.

NCCE now undertakes programmes for teachers on modern methods and techniques of teaching. It also started its
activities to provide leadership development programmes for the leaders of different type of co-operatives.

National Council for Co-operative Training (NCCT):-

The NCCT was established as per the recommendations of Swaminathan Committee in 1976. It is head quartered at
New Delhi. It is the apex institution for coordinating co-operative training in the country. The members of the council
are as follows:-

Representatives of

1. Government of India.
2. RBI
3. National Co-operative Union of India
4. National & State level Co-operative Federations
5. National Council for Education Research and Training (NCERT)
6. University Grants Commission (UGC)
7. Agriculture Universities of India
8. Registrar of Co-operative Society.
 9. Secretary of Government of India in charge of co-operation.

The president of NCUI shall be the chairman of NCCT and the Chief Executive of NCUI shall be the Director General of
NCCT. The most important objectives of NCCT are

1. To strengthen the managerial structure of co-operatives

2. To help them for the professionalization by improving the skill and knowledge through various programs.

Functions of NCCT:-

1. To formulate over all policies and plan relating to Co-operative Training.

2. To organize and direct the arrangements for co-operative training.
3. To arrange training of teaching staff co-operative training & Education.
4. To identify problem areas of co-operatives requiring research and organize research studies.
5. To ensure high academic standards in co-operative training and education.
6. To act as laisoning institution with the government of India and national and international universities.
7. To take necessary steps for providing consultancy services to co-operatives.
8. To collect necessary funds by way of grants, fees, subscriptions and contributions..etc

Training Structure of NCCT

NCCT has a three-tier system of co-operative training which consists of:-

1. VAMNICOM at apex level

2. Institute of Co-operative Management (ICM) for the middle level.
3. Subordinate/Junior Training Centers for bottom level

Vaikunth Mehta National Institute of Co-operative Management (VAMNICOM):-

It is the apex level co-operative training institute in India. It is situated at Pune In Maharastra. It was established
through continuous efforts of two eminent co-operators VL Mehta and Joshi in 1947. It provides training to top
executives of co-operatives.

In the earlier stages it provided education and training to employees of co-operatives and co-operative department
so f Bombay province only. In 1951 the RBI asked the center to diversify its programmes and to provide training to
aspirants all over India. As a result, It started many short term and long term courses and began to train co-operatives
and officers of other state also. At present VAMNICOM is conducting about 70 courses including PG Diploma in Co-
operative Business Management.

Institute of Co-operative Management (ICM):-

It is the middle level training institute in India. It started under the control of NCCT. ICMs provide training to middle
level personnel of co-operatives and officers of governments. There are 20 ICMs throughout the country. Two of them
are in Kerala (TVM and Kannur) They provide different training programmes of co-operative management. They conduct
courses in development banking, industrial coir, handloom fisheries..etc A few of them conducts HDCM courses.
Subordinate/Junior training Centers:-

These are the lowest level institutions in the co-operative training set up in India. These centers are to provide
training facilities to lower level personnel of co-operatives and co-operative department of the governments. These are
under management of respective state co-operative unions. But the curriculum for training and the policy..etc are
decided by the NCCT. There are more than 93 junior training institutes throughout the country and 9 of them are in
Kerala.

Kerala State Co-operative Union (KSCU):-

It is the state level apex body in the non-official co-operative sector for the promotion of the co-operative movement
in Kerala. What is NCUI to India is the KSCU for Kerala. It is the sole agency for propagating co-operative principles and
practices of co-operation all over Kerala. Its main objective is the healthy progress co-operative movement in Kerala.

Objectives and Functions of KSCU:-

1. To organize, assist and develop co-operative 5. To spread co-operative principles and practices.
societies. 6. Conduct seminar and conferences.
2. To organize co-operative training programmes 7. To give co-operative member education
for the employees. 8. Publication of co-operative literature like ‘co-
3. To spread co-operative education. operative journal’
4. To celebrate co-operative weak every year.

Structure of Co-operative Education and Training in Kerala.

1. Junior/Subordinate Training Centers:- These are the lowest level institution in the co-operative training set up in
India. These centers are to provide training facilities to lower level personnel of co-operatives and co-operative
department of the governments. These are under management of respective state co-operative unions. But the
curriculum for training and the policy..etc are decided by the NCCT. There are more than 93 junior training
institutes throughout the country and 9 of them are in Kerala.
2. Co-operative Training Colleges:- State Co-operative Union runs 13 Co-operative Training Colleges for providing
Higher Diploma in Co-operation and Business Management (HDC & BM). Duration of the course is one year and
admission is based on merit.
3. KICMA:- Kerala institute of Co-operative Management is an apex management institute of State Co-operative
Union. It is located at Neyyardam, Thiruvanthapuram. It was started in 1999. It offers MBA and MCA courses.
Kerala government has authorized its courses and made it mandatory for the promotion of employees in Co-
operative Societies.

4. Member Education Programme:- State Co-operative Union is the nodal agency to implement member education
programmes. The implementation of this programme is done by co-operative education instructors. For the
effective implementation, there is a district co-ordination committee for co-operative education under the
Chairmanship of District Co-operative Bank Presidents.

5. Publicity, Propaganda and Publication:- In order to provide mass awareness of co-operative ideas and principles,
KSCU conducts seminars, symposium, workshops, and awareness programmes. In addition to this, various books,
 articles, pamphlets. Etc are published by KSCU to spread co-operative ideas. ‘Kerala Co-operative Journal’ is one of
the main publications.

6. Celebration of Co-operative Day and Co-operative weak:- In order to aware the public about importance of co-
operation and co-operative practices, KSCU celebrates Co-operative weak and Co-operative Day every year.

Co-operative Day & Co-operative Weak:-

As per the instruction of ICA countries all over the world celebrate co-operative day to aware public about co-operation
and the importance of co-operative practices.

Most of the countries in the world celebrate the first Saturday of July every year as the co-operative day. But in India
since 1972, it is celebrated on November 14, on the memory of the first Prime Minister Jawaharlal Nehru, Who was an
deep supporter of co-operative movement. The co-operative week celebration also begins on the same date. Flag
hosting, co-operative oath, seminars, debates…etc are arranged to celebrate co-operative weak.

Co-operative Flag:- A flag is piece of cloth used represent or display an idea, country..etc Co-operative movement also
uses a flag. Co-operative flag was first used by ICA 1923 on the occasion of first international co-operative day at
London. It is in the design of Rainbow colors. Rainbow is a symbol of hope. The different colors in the flag represent:-

Violet – Felt need Green – Youth, growth and Orange – Courage

prosperity.
Indigo – Harmony Red – Dynamic and
Yellow – Quality and happiness fundamental change
Blue – Justice