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What is the difference between a Co-Operative Society and a Financial Company?

by Mukesh Doot 4 year(s) ago

You may wonder why you should invest your money with a cooperative society when there are so many options of the investment with financial companies. To understand and make a wise a decision, it is important that you know the basic difference between how a cooperative society functions compared to a financial company.

A non-banking financial company is generally owned by an individual or a handful of individuals. Until and unless, you don’t own the shares of a public sector company, you don’t share the profits made by the financial institution. The members or the investors are usually have no role to play in the framing of policies which are required to run the company. Members or investors have virtually no knowledge of the affairs and legal provisions of the non-banking financial companies.

On the other hand, a society is not an institution owned by an individual but is a form of a democratic organization. The societies are generally managed by a board of administrators. These administrators are elected by general members. Those who favour investing in the cooperative societies say that the board of administrators has to take decisions in a transparent and collective manner. The Department of Co-Operatives constantly reviews the functioning of the society at regular intervals.

So the question here is not whether you should invest with a financial company or a cooperative society or a bank, the thing is to know if investment in cooperative society is a viable option. Many think, it indeed is as :

  1. You become a share holder in the cooperative society and influence the decisions by directly participating in the cooperative entity’s regular affair.

  2. You can choose who takes decision in the entity on the basis of the individual’s competence and skills.

  3. You can keep a tab on the financial health of the entity and make decisions accordingly.

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