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Cooperative Society

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Last updated date: 09th Apr 2024
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what is Cooperative Society?

A Cooperative Society isn't a brand new concept. It prevails in all of the nations, that is almost a well-known idea. The Cooperative Society is active in all international locations and is represented in all the sectors such as agriculture, meals, finance, healthcare, etc. To protect the interests of weaker sections, a Cooperative Society is formed. It is a voluntary association of people, whose motive is the welfare of the contributors. Cooperative Society’ is intended to help each other. Thus, cooperatives are those institutions which are formed for mutual assistance of its members. The cooperative movement is mainly the movement of the poor. Cooperative organizations are formed to serve their members. The weaker sections of the society can create such organizations to protect themselves from exploitation through modern means of production and distributions.


A Cooperative Society is a voluntary organization of individuals who are mostly workers and small producers. They are organized under joint management on democratic methods to improve their domestic and business conditions and capital collection.


Importance of Cooperative Society

Cooperative institutions that started mainly for the provision of debt have taken many forms today. There are many cooperative institutions in the country with different sects of people as members. Cooperative Institutions arrange loans and provide funds to their members at reasonable interest. Cooperative organizations sell their offerings in Mandis at reasonable prices, thereby avoiding exploitation by middlemen. Cooperative milk laboratories collect milk from the villages and sell it in cities and provide the members with the right price for their milk.


Cooperative stores save people’s money by providing them with the right kind of goods at a reasonable price and curb arbitrary price collection by traders. Similarly, Cooperative Housing Societies provide cheap houses to the people. Today, in almost every sphere of life, cooperative institutions are engaged in the welfare of their members.



Functions of a Cooperative Society 

  • As it's far from a voluntary association, the club is likewise voluntary. a person is free to enroll in a Cooperative Society and also can leave whenever as in step with his preference. no matter their faith, gender & caste, the club is open to all. 

  • It's far more obligatory for the co-operative society to get registration. The Cooperative Society is a separate legal identity from society. 

  • It does not get laid low with the entry or exit of its members.

  • There's the restrained liability of the contributors of the co-operative society. liability is constrained to the quantity of the amount contributed by way of individuals as capital.

  • An elected managing committee has the electricity to make selections. contributors have the right to vote, by way of which they go with the participants who will represent the dealing with the committee.

  • The Cooperative Society works on the precept of mutual assistance & welfare. Hence, the principle of provider dominates its working. If any surplus is generated, it is dispensed among the contributors as a dividend in conformity with the bye-laws of the society.


Benefits of Cooperative Societies

The cooperative movement has contributed significantly to the development of rural areas. The feeling of brotherhood and a tendency to work together has grown among the members of these societies. Moreover, a sense of real democracy is communicated among the people. Cooperative marketing institutions have helped many get out of the clutches of money lenders and protect them from the exploitation of middlemen. Through these committees, farmers get help in saving money from moneylenders; as a result, they get into the habit of saving. It, in turn, helps them to face their problem on their own.


Types of Cooperative Societies

A committee is formed by the organization of people for the manufacturing of goods. This is appropriate at a place where neither more capital is required nor more technical knowledge. The profit in it avoids going to the capitalists. Although it is a democratic arrangement of industrial production, it has unfortunately not been successful in India.


  1. Producer Cooperative

To guard the interest of small manufacturers, these societies are set up. The co-operative society participants can be farmers, landowners, proprietors of the fishing operations. To grow the advertising and marketing possibilities and manufacturing performance,  producers decide to work together or as separate entities.They perform several sports like processing, advertising & distributing their own merchandise. This allows for lower prices and traces in every region with a mutual gain to each producer.


  1. Consumer Cooperative Society: 

This committee is more popular. Its purpose is to purchase goods directly from the manufacturer and deliver it to the consumers at a reasonable price. In this way, the middlemen are eliminated through this committee, benefiting the members of the society. Super-mount cooperative markets have been opened in the cities to provide goods at reasonable and low prices by the Cooperative Society. They were initially successful, but later, due to mismanagement, corruption and lack of experience, these types of markets could not work satisfactorily in most cities.


  1. Housing Cooperative Society:  

To help human beings with constrained earnings assemble homes at affordable expenses, these societies are hooked up. Their intention is to solve the housing issues of the participants. A member of this society, you obtain the residential residence at a decreased value. They assemble the houses and provide the option to contributors to pay in installments to purchase the residence. They construct apartments or offer plots to members on which the individuals themselves can assemble the homes as in step with their preference. This committee is formed to help the members who need lands and houses. The society has provided many facilities for these works. 


  1. Advertising Cooperative Society

With an intention of helping small manufacturers in promoting their products, those societies are established. The producers who desire to reap reasonable prices for his or her output are the participants of this society. For securing a favorable marketplace for the goods they cast off the middlemen and improve the aggressive function of its individuals. It collects the output of character individuals. diverse advertising features like transportation, packaging, warehousing, and many others are executed by means of the cooperative societies to sell the product on the best viable charge.  


  1. Lander Cooperative Society:

Its purpose is to provide financial assistance to poor and middle-class people in the form of loans. They can invest that amount in some work which is beneficial for them. This loan is given at the rate of interest.


  1. Cooperative Agriculture: 

Its objective is to increase the size of arable land by forming a Cooperative Society by a group of farmers. In this way, the yield can be increased by using modern equipment in agriculture.


  1. Credit Unions

Credit unions are generally member-owned financial cooperatives. Their principle is of people assisting human beings. They offer credit and economic services to individuals at competitive costs. each and each depositor has the proper to come to be a member. contributors attend the annual meeting and are given the right to elect a board of directors.


History of Cooperative Societies

Robert Owen, a social reformer of England, worked to improve the lives of the working class. The wealthier class of that time was putting a lot of pressure on the less privileged class. Distressed by the plight of workers, Owen began to work for the benefit of the community by making cooperation the basis. Gradually, his idea became popular and cooperative societies were developed as a useful tool to get out of the exploitation of the wealthy class.


History of Cooperatives in India

Cooperative Society in India was developed to improve the condition of farmers working in agriculture. When cooperatives started in India, the farmers of the country were trapped in the web of moneylenders. Even after working hard, they were not getting the full results of their hard work. Also, the country’s cottage industry businesses were in bad shape at that time. People associated with traditional handicrafts companies were not getting fair prices and markets.


During British rule in India, there was no one to listen to the farmers and craftsmen of India. In 1892, Sir Frederick Nicholson, an Englishman, met the Governor of Madras and requested to set up an agricultural bank for the workers of India. In 1904, his efforts passed the Cooperative Credit Act. According to this act, cooperative credit societies were born in each province. The government also worked to encourage these credit committees. There were many shortcomings in this act. The biggest drawback was that only credit cooperative societies could be formed based on this act, and there were no provisions for the cooperation of another nature. This act was amended in 1912 to address these deficiencies. According to this new act, a proposal for the formation of three types of committees was accepted. New cooperative banks were opened at the union, central and regional levels.


In 1919, once again, changes were made in this and handed over to cooperatives instead of the center. The cooperatives came under the regional government. By 1930, the cooperative movement spread rapidly throughout India, and the number of cooperatives at that time was 30.


Cooperative societies changed the appearance of agriculture credits, and the impact of traditional moneylenders was reduced. India’s cooperative movement also benefited from the increase in the price of agricultural products due to the second world war. They became stronger than before. During this period, the number of purchase-sale cooperatives and useful cooperatives stores increased rapidly.


Cooperatives Movement in India

After India became independent, cooperatives were placed under the influence of both the center and the state. Large public sector cooperatives like NAFED, KRIBHCO, IFFCO, etc. started functioning in the country. Each state also created public committees on a large scale. Despite large scale government support, the cooperative movement in independent India could not achieve the success which the cooperative movement achieved in European countries like Denmark and Sweden. 


Advantages of a Cooperative Society

The cooperative shape of enterprise gives the subsequent benefits:


  • Smooth to shape- A Cooperative Society is a voluntary affiliation and can be fashioned with not less than ten person participants. Its registration is very simple and may be executed without a good deal of criminal formalities.

  • Open membership- A club in a cooperative agency is open to everybody having a commonplace interest. a person can grow to be a member at any time he likes and can depart the society at any time by returning his stocks, without affecting its continuity.

  • Democratic management- A Cooperative Society is controlled in a democratic manner. It's based on the precept of ‘one man one vote. All contributors have identical rights and may have a voice in their management.

  • Restrained legal responsibility- The legal responsibility of the individuals of a Cooperative Society is constrained to the volume of capital contributed through them. They must not bear non-public legal responsibility for the money owed to society.

  • Stability- A Cooperative Society has a separate felony existence. It is not tormented by the loss of life, insolvency, lunacy, or everlasting disability of any of its participants. It has a fairly solid lifestyle and maintains to exist for a protracted length.

  • Low-cost Operations- The operation of a Cooperative Society is quite within your budget because of the removal of middlemen and the voluntary offerings provided through its individuals.

  • Government Patronage- government offers all varieties of assistance to cooperatives, inclusive of loans at lower prices of hobby and comfort in taxation.

  • Monetary blessings- Cooperative societies provide loans for productive purposes and financial assistance to farmers and other decrease earnings-earning human beings.


Disadvantages of a Cooperative Society:

  • The economic power of cooperative societies is low due to the restricted delivery of capital. The club price is much less as most individuals belong to center and low-income groups. The face value of shares is also very nominal. Similarly, the mortgage raising capability from nation cooperative banks is likewise confined. Hence, cooperative societies are incapable of striving for enlargement because of a shortage of funds.

  • Incapable management- The managerial board of a Cooperative Society is elected by using the contributors. These contributors may not own adequate qualifications and capabilities to run a business company efficiently. This will show to be a chief drawback for the success of the Cooperative Society.

  • lack of Motivation- Honorary office bearers of the society might also lack the enthusiasm to carry out their official duties as they get little or no incentive to work difficult. Due to the absence of hyperlinks between efforts and fabric rewards, the participants may also lack the zest to serve the agency to the high quality of their abilities. The outcomes of such negatives are sure to expose up in the functioning of the Cooperative Society.

  • inflexible enterprise Practices- Cooperative societies observe conventional modes of sale. They can't include new-age selling methods which include credit sale, home delivery, discount income, and so on. Therefore, their inflexible enterprise techniques fail them in competing with non-public commercial enterprise establishments.

  • confined consideration- The cooperative societies are set up for the reason of serving their participants. income earned via them is very low. As a result, the low return on funding is a component that demotivates human beings from becoming members of those companies.


  • The affairs of a Cooperative Society are brazenly mentioned in meetings. The participants can independently audit the books and data. Because of the loss of secrecy inside the enterprise affairs, some loopholes are created inside the organization.

  • Undue government Intervention- The daily operations of a Cooperative Society are challenged by government policies and rules. normal ebook-maintaining, auditing, and inspection of accounts through the authorities officers are mandatory components of the organization. The reports must be submitted to the registrar. a majority of these criminal formalities take quite a little time and therefore inhibit performance.

  • Struggle amongst members- The participants of Cooperative Society come from one-of-a-kind walks of life. often, their views on important issues may also fluctuate from every different, leading to sturdy resentment and disharmony among them. A few formidable contributors also want to govern the capabilities of the agency. Blinded by society, for that reason, crippling its efficiency.


Most of the problems are related to the framework of cooperatives. The cooperative movement was able to reach only 20 percent of the population of such a populated country. Most of the committees were limited to giving loans only. Lack of supervision and management of the committees, as well as of the training programs, limited the movement. Too much dependence on the government also led to its failure. The concept of cooperation with the government has reduced the benefit of the cooperative movement in India.

FAQs on Cooperative Society

1.What is a Cooperative Society instance?

Fine examples are dairy, fish farmers, weavers and artisans, and tribal co-operatives. Those are urban and rural monetary societies that provide loans to members at low costs of hobby, shielding the members from big money owed to conventional money lending corporations.


2.Why is Cooperative Society formed?

A Cooperative Society has been formed behind the following wide objectives: To render services to its participants in preference to making profits. It encourages a nation of mutual help in the region of competition. It assumes a country of self-assistance inside the vicinity of dependence.


3.Mention 3 advantages of Cooperative Society.

The 3 advantages of a Cooperative Society are:


  • It offers a great salary and position to its employees.

  • As it is for community service, it does not black advertising and marketing and hoarding.

  • Procurement is done directly from the manufacturers, therefore the earnings of middlemen is reduced.

4.What are the kinds of Cooperative Societies?

Given underneath are the sorts of cooperative societies:


  • Client Cooperative Society: Its purpose is to buy goods directly from the manufacturer and deliver it to the clients at an affordable price.

  • Housing Cooperative Society: This committee is fashioned to assist the participants who want lands and homes. 

  • Lander Cooperative Society: Its cause is to provide economic assistance to bad and center-class humans in the shape of loans.

  • Cooperative Agriculture: Its goal is to increase the scale of arable land through forming a Cooperative Society with the aid of a collection of farmers.

5.How does a Cooperative Society work?

Cooperatives are democratically owned with the aid of their individuals, with every member having one vote in electing the board of directors. Cooperatives may also include: agencies owned and controlled with the aid of the folks that use their offerings.


6.What Do You Mean by a Cooperative Society?

Cooperatives are institutions that are formed for mutual assistance of members. The cooperative movement is mainly the movement of the poor. Cooperative organizations are formed to serve their members.


7.Mention Three Advantages of Cooperative Society.

The three advantages of a Cooperative Society are:


  • It provides a good salary and position to its employees.

  • As it is for community service, it does not black marketing and hoarding.

  • Procurement is done directly from the producers, hence the profit of middlemen is reduced.

8.What are the Types of Cooperative Societies?

Given below are the types of cooperative societies:


  • Consumer Cooperative Society: Its purpose is to purchase goods directly from the manufacturer and deliver it to the consumers at a reasonable price.

  • Housing Cooperative Society: This committee is formed to help the members who need lands and houses. 

  • Lander Cooperative Society: Its purpose is to provide financial assistance to poor and middle-class people in the form of loans.

  • Cooperative Agriculture: Its objective is to increase the size of arable land by forming a Cooperative Society by a group of farmers. 

9.What are Some Disadvantages of a Cooperative Society?

Following are some of the disadvantages of a Cooperative Society:


  • Not many qualified employees.

  • Management is mostly inefficient.

  • Members usually try to take unnecessary benefits.