Co-operative Credit
What is co-operative credit ? Well, let us first look at the meaning of these two words. What is “credit” ? It means, literally, trust or belief : as when I say, “I do not give any credit to that rumour,” meaning, I do not believe it. It means the same thing in business. To sell “on credit” means to sell on trust-that is, not for immediate payment in cash, but on trust that payment will be made in the future. In a business sense, a man is said to “have credit” when he can be trusted to be able and willing to pay what he owes at the proper time. If you want a loan from a bank, you will not get it unless you “have credit”; the bank must be sure that you can and will repay the loan when the time to do it comes. Even then a bank will want some kind of security as well in the shape, either of property, or of the promise of another man that he will repay the loan if you do not.
Now a poor farmer has not, as a rule, enough “credit” to get a loan from an ordinary bank. He may be an honest man; but he has not enough property to give the security the bank demands. The bank may know he is willing to repay the loan, but it is not sure that he will be able to pay. Here is where co-operation comes in. What is co-operation ? It simply means “working-together”. When ten men reap a field together they are “co-operating”. So a “co-operative credit society” is a mutual help society, the members of which join together to help one another.
The way they help one another in a co-operative credit society is by joining their single individual credits together, so that the united credit of the whole society may be sufficient to make it worth while for a bank to advance loans to the society. A bank will not do business with a single poor farmer; but it will do business with a united body of poor farmers. This is the principle of the co-operative credit societies which are doing so much in India to relieve Indian farmers from debt, and to supply them with capital to work their farm.
The Government passed the Co-operative Credit Societies Act in 1904. Since then, village banks or co-operative credit societies have been established all over India. Immense good has been done. The burden of agricultural indebtedness has been lifted. Old debts to money-lenders have been paid off, and much land redeemed from mortgage. And, most important of all, the people have been learning habits of thrift, punctuality, mutual self-help and hopeful industry.
