Evolution of credit cooperatives in India
The India Cooperatives Act 1904 was promulgated at a time when the economy was predominantly agrarian and the reach of the banking system too narrow. Farmers were over-dependent on informal channels of ﬁnance such as the village money lenders to meet their credit needs for seasonal agricultural operations, and were subject to usurious interest rates. In such a situation, cooperatives were considered to be the best hope for the distressed farming community. Apart from meeting credit requirements, cooperatives were supposed to herald a new world view of development through mutual support and encouraging thrift. The intention behind institutionalizing the cooperatives was to help the rural peasantry to meet their genuine credit requirements by promoting member-driven and self-governed institutions. The then socio-economic conditions and subsequent economic and political events had a bearing on the evolution of such cooperatives.