What is Cooperative Societies Form of Organization?

Cooperative Societies is a form works for self-help and mutual help. Their main aim is to provide services to its members. These are started by poor and weak sections of the society. Minimum ten members should be there.

Features of Cooperative Societies:

  1. It is not affected by the entry and exit of the members.
  2. These societies are registered under Cooperative Societies Act and are subjected to detailed regulation under the act.
  3. It works in order to provide service to its members and not to earn profits.
  4. Profits are distributed among the shareholders for the capacity contributed by them and rate of dividend is 9%.
  5. Such firms get their capital from its members in form of share capital and democracy is the keynote of the management of such firms.

Classification of Cooperatives Societies

It is of six types. Consumer cooperatives are formed by people who want to buy goods of daily use, producer cooperatives are formed to protect small producers from exploitation. Marketing cooperatives are formed to protect produces from exploitation by middlemen when they market their products, housing cooperatives are formed to provide housing facility to its members, credit cooperatives provide credit to the needy ones and farming cooperatives are formed to carry on work jointly and share the returns.

Merits of Cooperative Societies:

  1. Limited liability: Members of cooperative societies also have limited liability.
  2. Social services: They helps in imparting moral and educative values among members, which are important for better living.
  3. State assistance: Govt. provides them grants, loans and financial help in order to make them function properly.
  4. Open membership: Anyone can join such societies irrespective of caste, color, creed etc. There is no limit to the maximum number.

Supply of goods at cheaper rates: As there are no middlemen involved, such societies ensure regular supply of goods at cheaper rates.

Limitations of Cooperative Societies:

  1. Lack of secrecy: Secrecy cannot be maintained because the affairs of the business are exposed to the members.
  2. Lack of interest: Such societies become lifeless and inactive in its operation, within a short span of its dramatic start.
  3. Lack of coordination: Such societies fail because of the absence of coordinated and joint action.
  4. Absence of mutual interest: Some members use such societies in order to fulfill their personal needs and as a source of their personal gains.
  5. Insufficient motivation: Members do not get motivated because the rate of return on capital is low.
  6. Corruption: Prevalence of corrupt practices in management and functioning is another demerit of such societies.

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