Co-Operative Society

History

During the 1960s the cooperative sector in India was responsible for the distribution of 70 percent of the
fertilizers consumed in the country. This sector had adequate infrastructure to distribute fertilisers but had
no production facilities of its own and hence was dependent on public/private sectors for supplies. To
overcome this difficulty and to bridge the demand supply gap in the country, a new cooperative society was
conceived to specifically cater to the needs of farmers. It was an unique venture in which the farmers of
the country through their own cooperative societies created this new institution to safeguard their interests.
The number of cooperative societies associated with IFFCO have risen from 57 in 1967 to more than 37,700
at present. Indian Farmers Fertiliser Cooperative Limited (IFFCO) was registered on November 3, 1967 as a
Multi-unit Co-operative Society. On the enactment of the Multistate Cooperative Societies act 1984 & 2002,
the Society is deemed to be registered as a Multistate Cooperative Society. The Society is primarily engaged
in the production and distribution of fertilisers. The bylaws of the Society provide a broad frame work for
the activities of IFFCO as a cooperative society.

Meaning

Cooperatives as legal entities

A mainstream cooperative comprises a legal entity owned and democratically controlled by its members,
with no passive shareholders, unless they hold non-voting shares. It thus combines the equal control
characteristic of many partnerships with the legal personality conferred on corporations.
Cooperatives may or may not pay dividends. For cooperatives falling in the latter category, any surplus may
be returned to members by way of a rebate or bonus on their activity with the cooperative, or a dividend
on their shareholding in the cooperative.
Cooperative identity

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and
solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty,
openness, social responsibility and caring for others. Such legal entities have a range of unique social
characteristics. Membership is open, meaning that anyone who satisfies certain non-discriminatory
conditions may join. Unlike a union, in some jurisdictions a cooperative may assign different numbers of
votes to different members. However most cooperatives are governed on a strict "one member, one vote"
basis, to avoid the concentration of control in an elite. Economic benefits are distributed proportionally
according to each member's level of economic interest in the cooperative, for instance by a dividend on
sales or purchases. Cooperatives may be generally classified as either consumer or producer cooperatives,
depending largely on the mutual interest (see mutual organizations) that their membership shares.
Classification is also often based on their function.

There are 14 types of cooperatives like housing, retailer's, utility, agricultural, workers, social, consumers,
Carsharing, Federal or secondary cooperatives, Cooperative wholesale society, Cooperative Union, Co-
operative Party. We will take only two types of cooperatives:
Credit cooperative.
Consumer cooperative.

Credit co-operative
A credit union is a cooperative financial institution that is owned and controlled by its members. Credit
unions differ from banks and other financial institutions in that the members who have accounts in the
credit union are the owners of the credit union.
Credit union policies governing interest rates and other matters are set by a volunteer Board of Directors
elected by and from the membership itself. Only a member of a credit union may deposit money with the
credit union, or borrow money from it. As such, credit unions have historically marketed themselves as
providing superior member service and being committed to helping members improve their financial health.
Credit unions may be viewed as non-profit organizations, or alternatively as for-profit enterprises charged
with making a profit for their members (who receive any profits earned by the cooperative in the form of
dividends paid on savings, which are taxed as ordinary income, or reduced interest rates on loans). This
debate reflects credit unions' unusual organizational structure, which attempts to solve the principal-agent

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Co-Operative Society

problem by ensuring the owners and the users of the institution are the same people. In any case, credit
unions generally cannot accept donations and must be able to prosper in a competitive market economy.
Credit unions typically pay higher dividend (interest) rates on shares (deposits) and charge lower interest
on loans than banks.[1] Credit union revenues (from loans and investments) do, however, need to exceed
operating expenses and dividends (interest paid on deposits) in order to maintain capital and solvency.
Credit unions offer many of the same financial services as banks, including share accounts (savings
accounts), share draft (checking) accounts, credit cards, and share term certificates (certificates of deposit)
and online banking.
Credit unions exist in a wide range of sizes, ranging from volunteer operations with a handful of members
to institutions with several billion Rubbet in assets and hundreds of thousands of members.

CONSUMERS CO-OPERATIVE
A consumers' cooperative is a cooperative business owned by its customers for their mutual benefit. It is a
form of free enterprise that is oriented toward service rather than pecuniary profit. The customers or
consumers of the goods and/or services the business provides are often also the individuals who have
provided the capital required to launch or purchase that enterprise.
There are many types of consumers' cooperative. There are health care, insurance, and housing
cooperatives as well as credit unions, agricultural and utility cooperatives. The major difference between
consumers' cooperatives and other forms of business is that the purpose of a consumers' cooperative
association is to provide quality goods and services at the lowest cost to the consumer/owners rather than
to sell goods and services at the highest price above cost that the consumer is willing to pay. In practice
consumers' cooperatives price goods and services at competitive market rates. The difference is that where
a for-profit enterprise will treat the difference between cost (including labor, etc.) and selling price as
financial gain, the consumer owned enterprise returns this sum to the consumer/owner as an over-
payment.
Large consumers' co-ops are run much like any other business and require workers, managers, clerks,
products, and customers to keep the doors open and the business running. In smaller businesses the
consumer/owners are often workers as well. Consumers' cooperatives can differ greatly in start up and also
in how the co-op is run but to be true to the consumers' cooperative form of business the enterprise should
follow the Rochdale Principles.
Consumers' cooperatives may, in turn, form Co-operative Federations. These may come in the form of co-
operative wholesale societies, through which Consumers' Co-operatives collectively purchase goods at
wholesale prices and, in some cases, own factories. Alternatively, they may be members of Co-operative
Unions.

Investment of funds:
A co-operative society can invest and deposit its funds only in:
1- A central bank or the state co-operative bank.
2- Any of the securities specified in sec. 20 of the Indian trust act.
3- In the shares or securities of any other registered society.
4- With any other bank or person carrying on the business of banking, approved for this purpose by the
registrar.
5- Any other mode permitted by the rules.

Features of cooperative society:

The chief features of cooperative society are:

(1) Body cooperate

The cooperative society is registered. Being a corporate body, it enjoys certain privileges which are enjoyed
by company on its incorporation.

(2) Voluntary association

The membership of cooperative society is voluntary. Any person having a common interest can become the
member of a society.

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Co-Operative Society

(3) One man one vote

In a cooperative society, a member has only one vote irrespective of the shares held by him. The principle
of one man vote makes the society truly democratic.

(4) Service motive

A cooperative society is primarily set p for rendering service to its members in a particular field. A society is
however not debarred to earn profit on the service provided to the non members.

(5) Distribution of profits

In case of partnership and company, the profit is distributed among members on the basis of capital held
by them. In cooperative organization, the profile is distributed among the members on the basis of
individual purchase made by them inv the trading year.

(6) Control and management

Each member has one vote in the cooperative society. The members elect the managing committee to
carry on day to day affairs of the company. The managing committee carries out the policy as laid down in
the general meeting of the society.

Books Accounts :-
The registrar may direct the cooperative society to maintain proper accounts in relation:
1- all sums of money received and expended by the society and the matters in respect of which receipts
and expenditure take place.
2- all sales and purchases of goods by the society and of the stock in hand and its valuation.
3- the assets and liabilities belonging to the society .

the registrar is empowered to call the society o furnish such statements and returns and to produce such
returns as he may require from time to time.

the following books of accounts and registers are to be maintained by the society:-

1- cash book
2- general ledger and personal ledger.
3- stock register.
4- property register.
5- register of audit objection and their rectifications.
6- such other accounts and books as from time to time be specified by the government.
Documents and vouchers:-
voucher:
1- internal voucher: when a concern incurs some expense for the concern itself and receipt for the same
cannot be obtained from any other party, the concern prepares itself a voucher. this voucher is termed as
internal voucher. a voucher is prepared by concern for this expense and it is signed by the officer
concerned. it is a proof of having incurred the expenditure.

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