Credit Cooperative Case Study

The public figure Mr. Friedrich Wilhelm Raiffeisen developed the idea of credit cooperative. Theoretical developments of Mr. Raiffeisen in the field of agricultural credit cooperation in many respects were based on ideological views of Mr. G. Schultz-Delich. Developing theoretical bases of credit cooperation, Schultz-Delich solved one of the most pressing problems of small-scale craft enterprises – a possibility of receiving the small cheap credit. The fundamental principles of activity of its credit cooperatives were as follows:
1) The cooperatives united only able-bodied persons;
2) For members of cooperative also shares are obligatory introductory;
3) Members of cooperative bear limited liability according to its obligations at a rate of the share;
4) The formation of reserve fund on a covering of possible losses;
5) On a share following the results of activity of cooperative dividends are charged;
6) The
In relation to them the registration order of their education works, all details of construction and functioning of cooperative, and only the basic elements in details do not register in the legislation: creation order, main powers, general principles of the organization of operations, relations with public authorities, taxation questions. At the same time, as a rule, they are exempted from all or the majority of taxes, proceeding from logic of the fact that their activity goes not for receiving own profit, and for increase in the income of the members.
If the credit cooperative system is created by the state “from above” and financed by it, then the allowing order of opening of cooperatives and rigid control of their activity works. The public authorities perform functions of the second and third level, they approve the charters, and regulations regulating their activity, at the same time, the legislation is as much as possible