What does theory say about cooperative societies?
--Cooperatives and ROSCAS are roots of microfinance
--Collect fund from savers and allocate them to borrowers
--Members do not have to wait turn to borrow
--Borrowers and savers are shareholders: member-owned and member-managed
--Social sanctions in place: belong to same community + own shares
--Incentives to monitor and enforce contracts are linked to institutional design.
--Role in mobilizing local deposits, peer monitoring and addressing risk
Antecedents of legal environment
--Introduced in India by the British to fight Mahajanin rural areas
--Cooperative CreditSocieties Act 1904 (Raiffeisen´smodel)
--Cooperative Societies Act 1912 new types: multi purpose societies
--Development of societies in Bombay and Madras due to the mortgage right in land.
--Reforms Act 1919: cooperation became a provincial subject.
--Organization and control under the Register of Cooperative
--Bombay pass coop societies Act 1925, Madras 1932, Bihar & Orissa1935.
--Central Bank in 1935. Took up program to provide cheap finance for agriculture for production purposes