Comprehension

Read the following source carefully and answer the questions that follow:
Loans from Cooperatives
Besides banks, the other major source of cheap credit in rural areas are the cooperative societies (or cooperatives). Members of a cooperative pool their resources for coopera tion in certain areas. There are several types of cooperatives possible such as farmers cooperatives, weavers cooperatives, industrial workers cooperatives, etc. Krishak Coop erative functions in a village not very far away from Sonpur. It has 2300 farmers as members. It accepts deposits from its members. With these deposits as collateral, the Cooperative has obtained a large loan from the bank. These funds are used to provide loans to members. Once these loans are repaid, another round of lending can take place. Krishak Cooperative provides loans for the purchase of agricultural implements, loans for cultivation and agricultural trade, fishery loans, loans for construction of houses and for a variety of other expenses.

Question: 1

How do ‘Krishak Cooperatives’ secure funds for providing loans to their members?

Updated On: Dec 14, 2024
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Solution and Explanation

Krishak Cooperatives secure funds by pooling deposits from their members. Using these deposits as collateral, they obtain large loans from banks, which are then used to provide loans to their members.
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Question: 2

What are the different types of loans that ‘Krishak Coopera tives’ offer to their members?

Updated On: Dec 14, 2024
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Solution and Explanation

Krishak Cooperatives offer various types of loans, including:
  1. Loans for purchasing agricultural implements.
  2. Loans for cultivation and agricultural trade.
  3. Fishery loans.
  4. Loans for construction of houses and other essential expenses.
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Question: 3

Why are such cooperatives desirable in rural areas?

Updated On: Dec 14, 2024
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Solution and Explanation

Cooperatives are desirable in rural areas because they provide an accessible and affordable source of credit, reduce dependency on moneylenders, and promote economic activities among farmers, weavers, and workers, fostering rural development.
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