With reference to Cooperative Societies, consider the following statements: 1. They are a major source of cheap credit in rural areas. 2. Members operate individually without pooling resources. 3. Cooperatives cannot obtain loans from banks; they must rely solely on member deposits. Which of the statements given above is/are correct?

Correct Option The correct option is 1 only Explanation A cooperative society is a voluntary association of individuals who join together to protect or promote their common economic interests. It operates on the principle of self-help and mutual help, pooling resources to provide services or credit to its members at reasonable rates. Statement-wise Analysis - Statement 1 is Correct: Cooperative societies are a significant source of formal credit in rural India. They were established primarily to provide affordable credit to farmers and rural artisans, reducing their dependence on informal moneylenders who charge exorbitant interest rates. - Statement 2 is Incorrect: The fundamental basis of a cooperative society is the pooling of resources. Members contribute capital and deposits into a common pool, which is then utilized to lend to members in need. They do not operate individually in isolation; rather, they function collectively to achieve economies of scale and mutual benefit. - Statement 3 is Incorrect: Cooperative societies are not restricted solely to member deposits for funds. They can and do obtain loans from higher-tier cooperative banks (such as District Central Cooperative Banks or State Cooperative Banks) and commercial banks. Additionally, they receive refinancing support from institutions like NABARD to maintain liquidity and expand their lending capacity. Key Takeaway Key Takeaway: Cooperative societies function on the principle of collective resource pooling to provide affordable credit, serving as a crucial alternative to informal lending in rural economies. They are integrated into the formal banking structure and can access funds beyond just member deposits.

With reference to Cooperative Societies,… - NCERT Class 10 Economics MCQ

NCERT Class 10 Economics — Chapter 3: Money and Credit

mcqmedium

With reference to Cooperative Societies, consider the following statements:

They are a major source of cheap credit in rural areas.
Members operate individually without pooling resources.
Cooperatives cannot obtain loans from banks; they must rely solely on member deposits.

Which of the statements given above is/are correct?

NCERT textbook question

From NCERT Understanding Economic Development · Page 47

Options

A1, 2 and 3
B2 only
C1 only
D1 and 3 only

Did you get this right?

Solution

Correct Option

The correct option is

1 only

Explanation

A cooperative society is a voluntary association of individuals who join together to protect or promote their common economic interests. It operates on the principle of self-help and mutual help, pooling resources to provide services or credit to its members at reasonable rates.

Statement-wise Analysis

Statement 1 is Correct: Cooperative societies are a significant source of formal credit in rural India. They were established primarily to provide affordable credit to farmers and rural artisans, reducing their dependence on informal moneylenders who charge exorbitant interest rates.
Statement 2 is Incorrect: The fundamental basis of a cooperative society is the pooling of resources. Members contribute capital and deposits into a common pool, which is then utilized to lend to members in need. They do not operate individually in isolation; rather, they function collectively to achieve economies of scale and mutual benefit.
Statement 3 is Incorrect: Cooperative societies are not restricted solely to member deposits for funds. They can and do obtain loans from higher-tier cooperative banks (such as District Central Cooperative Banks or State Cooperative Banks) and commercial banks. Additionally, they receive refinancing support from institutions like NABARD to maintain liquidity and expand their lending capacity.

Key Takeaway

Key Takeaway: Cooperative societies function on the principle of collective resource pooling to provide affordable credit, serving as a crucial alternative to informal lending in rural economies. They are integrated into the formal banking structure and can access funds beyond just member deposits.

Your note

More from Chapter 3: Money and Credit

With reference to 'Demand Deposits', consider the following statements: 1. They are fixed deposits that cannot be withdrawn before maturity. 2. They share the essential features of money. 3. The facility of cheques against these deposits makes it possible to settle payments without the use of cash. Which of the statements given above is/are correct?

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With reference to the 'Terms of Credit', consider the following statements: 1. Terms of credit refer only to the interest rate. 2. The mode of repayment is a component of the terms of credit. 3. Terms of credit vary substantially from one credit arrangement to another. Which of the statements given above is/are correct?

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Why is the supervision of the Reserve Bank of India necessary for formal sources of loans? Statements: 1. To ensure banks lend exclusively to large industries. 2. To ensure banks maintain the required cash balance. 3. To set the interest rates for informal moneylenders. Which of the statements given above is/are correct?

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Keep practising Chapter 3: Money and Credit

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