In this paper we will describe the role of the credit cooperatives in the rural economy. These cooperatives mainly handle the delivery of microfinance. Rural Credit cooperatives are mainly responsible for microfinance delivery. They have the potential and enthusiasm to provide credit to the poor farmers at a low cost.
These cooperatives help the poor people of the rural areas to minimize their transaction costs and reduce risks.
Another entity, named lending group, also works for the farmers’ benefit. In the developing countries, the lending groups and the rural credit cooperatives have been working together but in different ways. The credit cooperatives usually act as a financial intermediary.
The credit cooperatives mobilize the savings deposits.
It does not depend highly upon the external sources.
Rural credit cooperatives increase the poor farmers’ incentive to repay.
Success of the credit cooperatives depend highly on the training of management as well as members.
The credit cooperatives do not advance their activities beyond the intermediation regarding financial issues.
These cooperatives help the government to build strong managerial and institutional capabilities in the rural areas.
Rural Credit Cooperatives’ Union:
In some developing countries the rural credit cooperatives form an union to strengthen their position and role in the rural economy.
Last Updated on : 30th July 2013