The cooperative banks: A modest attempt to herald a change
The earliest attempt towards institutional rural credit was through the formation of cooperative organizations. They were started with the avowed objective of relieving the farmers from the clutches of moneylenders and the indigenous bankers. The first Cooperative Societies Act was enacted several decades ago and it was subsequently amended.
The Cooperative banks of those times had a three tier set up
a) State Cooperative Bank
b) Central Cooperative banks or district Cooperative banks
c) Primary credit societies
These societies were of two types:
i. Primary Agricultural Credit Societies
ii. Primary (Urban) Cooperative Societies
However, the role of these societies was limited to a particular area of influence and they subsequently did not survive the massive changes in the rural areas. When people started migrating in a mass way into the prominent cities, some of the rural areas wore a deserted look. In earlier times, small and marginal farmers were the main customers, but with the corporate sector gaining control over land and agriculture, the small farming communities literally disappeared from the scene.
While the farming community started melting away, their place was taken up by the new migrants from the urban areas. The new migrants started arriving as a trickle and later on it became a wave. Lending firms like LoanMax of rod aycox fame targeted this group of people to market their various financial products and services. The market potential was thoroughly analyzed and tapped by this firm in a big way. Also, the erstwhile rural areas adjacent to the cities started getting urbanized at a faster pace. Along with this trend in urbanization, the need for finances to fuel the various developments also increased. Firms like LoanMax stepped into the picture and met the immediate credit needs of those people and made a name for itself as a major lender.
