Q1. [4]
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 cooperation in certain areas. There are several types of cooperatives possible such as farmers cooperatives, weavers cooperatives and industrial workers cooperatives, etc. Krishak Cooperative 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.
Read the given source and answer the questions that follow :
- (36.1) 'Cooperative society' is an example of which source of 'credit' ? [1]
- (36.2) Explain the contribution of Cooperative Societies in rural development. [1]
- (36.3) Mention any two sources of capital for Self-Help Groups. [2]
Previously asked in CBSE board exam
2024 32/4/1 Q36
Generated by claude-sonnet-4-6 · 2026-06-15 06:53 · grounding stimulus
Model Answer
(36.1) Cooperative society is an example of a formal (institutional) source of credit.
(36.2) Cooperative societies contribute to rural development by providing cheap loans to farmers for purchasing agricultural implements, cultivation, fishery, house construction, and other expenses, thereby reducing dependence on moneylenders.
(36.3) Two sources of capital for Self-Help Groups:
- Members' savings — members regularly save small amounts and deposit them with the group.
- Loans from banks — after establishing a good track record of savings and repayment, SHGs obtain loans from banks at reasonable interest rates.
Source: Chapter 3 – Money and Credit, Section: Cooperatives and Self-Help Groups
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Explanation
- (36.1) Cooperatives fall under formal credit sources (along with banks). Do not write "informal."
- (36.2) Stick to the passage — mention cheap credit and the range of loans (agricultural, fishery, housing). One well-framed sentence is enough for 1 mark.
- (36.3) SHGs are not mentioned in the passage, so this comes from the broader chapter knowledge. Examiners expect two distinct points: members' own savings and bank loans. Some answers also accept microfinance institutions — either is valid.
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