Cooperative Societies - Part3

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