Understanding Cooperatives

Definition & Purpose:

A cooperative is a group-based business model, democratically controlled by its

members.

Example: A group of tribal artisans forming a cooperative to market their

handicrafts collectively, ensuring better reach and fair prices.

Core Principles:

Voluntary Membership: Open to all who can benefit from and contribute to the
cooperative.

Democratic Control: Each member typically gets one vote, fostering equality.

Economic Participation: Members contribute to and democratically control the

capital.

Independence: While cooperatives can partner with governments, they remain

autonomous.

Education & Training: Continuous learning for members to enhance their skills
and knowledge.

Cooperation Among Cooperatives: Networking with other co-ops for mutual

benefit.

Community Concern: Cooperatives often focus on sustainable community

development.

Benefits:

Economic Empowerment: Enables marginalized communities like tribals to pool

resources and access larger markets.

Social Development: Fosters community spirit and collective problem-solving.

Sustainability: Encourages environmentally friendly practices and local

development.
Guidelines for Forming a District-Level Cooperative

Identify the Objective:

Example: Addressing a common need like limited market access for agricultural
produce by creating a cooperative that handles marketing and sales.

Initial Meeting:

Gather interested members, such as local farmers or artisans. Discuss and agree
on the cooperative’s objectives.

Membership:

Inclusivity: Ensure open membership to all eligible community members,

including women and youth.

Example: A cooperative in Sonbhadra including members from various tribal

backgrounds, enhancing diversity.

Draft Bylaws:

Key Components: Include governance structure, member roles and

responsibilities, financial management procedures, and dispute resolution
methods.

Example: Bylaws stipulating how profits are to be shared among members or

reinvested into the cooperative.

Legal Registration:

Register with the state's Registrar of Cooperative Societies. Provide necessary

documents, including bylaws, member details, and objectives.

Capital Accumulation:

Source initial capital through member contributions, loans, or grants.

Example: Each member contributes a small amount to start, supplemented by a

government grant for tribal cooperative development.

Board of Directors:

Elect leaders democratically from amongst members.

Example: Annual elections for a board comprising representatives from different
tribal groups.

Training and Capacity Building:

Provide training in business management, cooperative principles, and specific

skills.

Example: Workshops on sustainable agricultural practices or marketing strategies.

Launch:

Begin operations, like opening a retail outlet for tribal crafts or starting a
collective farming initiative.
Compliance and Support

Ensure adherence to legal and financial norms set by cooperative laws.

Explore schemes like the Tribal Development Fund for financial aid.
Continued Management

Regular meetings and transparent operations.

Regular audits and open financial records.

Community Engagement and Development

Focus on projects that benefit the wider community, like skill development
programs or environmental initiatives.

Encourage youth and women to take active roles in leadership and decision-
making.

By following these enriched guidelines and examples, the formation of a

cooperative in Sonbhadra can be a successful venture that not only provides
economic benefits but also strengthens the community's social and cultural fabric.
Detailed guide for forming a Primary Agricultural Credit Society (PAC) which is a
type of grassroots-level cooperative in India focused primarily on providing
financial services, like credit and savings facilities, to its members, who are
typically farmers or rural workers.
Understanding Primary Agricultural Credit Societies (PACs)

Definition & Purpose:

PACs are small-scale, member-owned and controlled financial cooperatives.

Objective: To provide affordable credit to its members, mainly for agricultural and
related activities, and to inculcate the habit of saving.

Core Principles:

Similar to general cooperatives, PACs operate on principles of voluntary

membership, democratic control, member economic participation, autonomy,
education and training, cooperation among cooperatives, and community
concern.

Benefits:

Financial Inclusion: Brings banking services to rural areas where traditional

banking may be limited.

Member Empowerment: Members have a say in the society's operations and can
access loans at more favorable terms than commercial banks.
Steps to Form a PAC

Initial Gathering:

Organize a meeting with potential members, mostly from the farming community,
to discuss forming a PAC.

Example: A meeting of small-scale farmers in a village to discuss credit needs and

savings plans.

Define Objectives and Services:

Clearly state the PAC's goal: providing credit, savings opportunities, and other
financial services.
Example: The PAC could focus on providing loans for crop production, farm
equipment, or emergency needs.

Draft Bylaws and Regulations:

Develop bylaws that govern membership eligibility, shareholding, management

structure, loan disbursement criteria, interest rates on loans and savings, etc.

Example: A bylaw stating that only farmers owning less than a certain acreage can
become members.

Membership Drive:

Enroll members who are willing to buy shares in the society and abide by its rules.

Example: Each member purchases a nominal share of INR 100 to gain

membership.

Legal Registration:

Register the PAC with the local District Cooperative Officer or Registrar of
Cooperative Societies.

Submit bylaws, member details, and a registration fee.

Electing Management:

Democratically elect a management committee from among the members.

Example: A committee of 7-11 members elected for three-year terms.

Capital Accumulation:

Accumulate initial capital through member share contributions and seek any
available government grants or subsidies.

Training and Development:

Train committee members and staff in cooperative management, accounting, and

the legal aspects of running a PAC.

Example: Workshops conducted by the District Cooperative Training Center.

Operational Setup:
Set up an office, maintain books of accounts, and start offering services like
accepting deposits and granting loans.
Compliance and Government Collaboration

Ensure adherence to the Cooperative Societies Act and other relevant regulations.

Regular audits and transparent financial reporting.

Explore government programs like NABARD's refinance schemes for additional

support.
Community Engagement

Focus on community needs and adjust services accordingly, such as providing

special loans for women farmers or young entrepreneurs in agriculture.
Regular Monitoring and Adaptation

Regular general body meetings to discuss progress, challenges, and future plans.

Adapting loan products and services based on members' changing needs.

By following these steps, a PAC can effectively meet the financial needs of its
members, especially in rural and agricultural communities. It’s important that the
PAC remains true to its mission of serving its member's interests and contributing
to the overall development of the community.