Comprehension

Read the following source and answer the questions that follow:

Loans from Co-operatives
Besides banks, the other major source of cheap credit in rural areas are the co-operative societies. Members of a co-operative pool their resources for co-operation in certain areas. There are several types of co-operatives possible such as farmers co-operatives, weavers co-operatives, industrial workers co-operatives etc. Krishak Co-operative 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 co-operative 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 Co-operative provides loans for the purchase of agricultural equipment, loans for cultivation and agricultural trade, fishery loans, loans for construction of houses and for variety of other expenses.

Question: 1

Which sector includes credit facilities offered by Cooperative Societies?

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Co-operatives primarily function in the primary sector by offering credit to help members involved in agriculture, farming, and rural development activities.
Updated On: Jan 13, 2026
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Solution and Explanation

Co-operative Societies primarily offer credit facilities within the primary sector. This sector encompasses agriculture, fisheries, and other rural endeavors, which are the main focus of these societies. For instance, Krishak Co-operative provides loans specifically for agricultural activities, including the acquisition of farming equipment and cultivation expenses.
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Question: 2

How do Self-Help Groups access external funding?

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N/A
Updated On: Jan 13, 2026
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Solution and Explanation

Not available
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Question: 3

Explain the functioning of Co-operative Societies.

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Co-operative societies play a vital role in providing financial support to rural communities by pooling resources and facilitating lending within the community.
Updated On: Jan 13, 2026
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Solution and Explanation

Co-operative societies are member-owned organizations created for mutual financial assistance. Their core operations comprise:
- Member Deposits: Members provide savings, functioning as deposits. These deposits are used as security for bank loans.
- Loan Provision: Funds acquired from banks are allocated as loans to members. These loans support various needs like farming, equipment purchases, and housing.
- Loan Cycle: Loan repayments are reinvested to provide further loans. This process ensures continuous financial aid for members.
- Democratic Management: Co-operatives are managed by elected member representatives, and profits are distributed among members.
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