Nidhi company VS Cooperative society
Both cooperative societies and Nidhi companies aim to enhance the lives of their members. Although they both offer financial assistance, they differ from one another in a few key ways.
Cooperative societies are not a novel concept. This idea is practically ubiquitous and is prevalent across all nations. The cooperative society is active in every nation on earth and is present in every industry, including food, finance, healthcare, and agriculture.
The cooperative society is established to safeguard the interests of vulnerable groups. It is a group of people who have voluntarily come together with the goal of promoting their own welfare.
A cooperative society is frequently a voluntarily organized group of people who come together with the goal of collaborating and advancing their economic interests. These societies operate under the tenets of mutualism and self-help.
Types of Cooperative Society
1] Producer Cooperatives
These organizations were established to safeguard the interests of small producers. Members of cooperative societies can be farmers, landowners, or proprietors of fishing businesses. Producers choose to collaborate or operate as independent businesses in order to improve marketing opportunities and production effectiveness.
They carry out a variety of tasks, including processing, marketing, and distribution of their own goods. This benefits all producers equally by lowering prices and burdens in each area.
2] Consumer Cooperative
Customers from a specific region own and run these enterprises for their mutual benefit. Their goal is to offer daily necessities at the best price. Instead of focusing on making a financial profit, they try to serve the customers.
3] Credit Unions
In general, credit unions are financial cooperatives owned by their members. People assisting people is their guiding principle. They provide members with competitively priced credit and financial services. Everyone who deposits money has the option to join. Members have the opportunity to choose a board of directors at the annual meeting.
4] Marketing Cooperative Society
These societies have been created with the intention of assisting small producers in marketing their goods. Members of this group are the producers who want fair rates for their products.
They cut out the middlemen to ensure a favorable market for the products and boost each member’s ability to compete. The output of every member is gathered. The cooperative societies carry out a variety of marketing tasks, such as shipping, packing, warehousing, etc., to sell the goods at the best price.
5] Housing Cooperative Society
These organizations are set up to aid those with low incomes in building homes at affordable prices. Their goal is to find solutions for the members’ housing issues. An individual who belongs to this society wants to buy a property at a more affordable price.
Members have the opportunity to pay in installments to purchase the homes after they are built. They either build apartments or provide members with sites on which they can build the homes of their choice themselves.
The Features of a Cooperative Society
- The association is voluntary, and as such, so is membership. An individual has the freedom to join a cooperative organization and to leave at any moment. Membership is open to everyone, regardless of their caste, gender, or religion.
- The cooperative society must register in order to operate. A separate legal entity from the society is the cooperative society.
- It is unaffected by the joining or leaving of its members.
- The cooperative society’s members have a limited number of obligations. Liability is capped at the amount that members contribute as capital.
- A governing committee that has been elected has decision-making authority. Voting privileges allow members to choose the individuals who will make up the managing committee.
- The mutual aid and benefit principle underlies the operation of the cooperative society. As a result, the principle of service governs how it operates. If there is a surplus, it is dispersed to the members as a dividend in accordance with the society’s bylaws.
HOW DOES A COOPERATIVE SOCIETY WORK?
The mutual aid and benefit principle underlies the operation of the cooperative society. As a result, the principle of service governs how it operates. If there is a surplus, it is disbursed to the members as a dividend in accordance with the society’s bylaws.
A cooperative society is frequently a voluntarily organized group of people who come together with the goal of collaborating and advancing their economic interests. These societies operate under the tenets of mutualism and self-help. The main objective is to support the members.
HOW NIDHI COMPANY IS DIFFERENT FROM A COOPERATIVE SOCIETY?
Only members of Nidhi companies are eligible to receive deposits or receive loans.
A person who joins an organization voluntarily to safeguard their social and economic interests is considered a member of a cooperative society. People are free to join cooperative societies as they see fit, but they are not allowed to transfer their shares.
|SR.NO.||NIDHI BANK||COOPERATIVE BANK|
|1||It comes under section 406 of the Companies Act, 2013.||It was registered under the Cooperative Societies Act of 1912.|
|2||Anyone who has the necessary documents can open a Nidhi bank.||Cooperative societies are a voluntary association of people.|
|3||Nidhi bank accepts deposits and lends money to its members only. It can not conduct any other activities except lending and borrowing.||Cooperative societies are created via self-help and group effort for the benefit of all members. To generate an excess, members are free to engage in any activities.|
|4||The Nidhi Company’s goal is to promote among its members the practice of saving and building up reserve cash.||A cooperative society makes use of the savings of the less powerful members of the community for beneficial endeavors.|
|5||Nidhi can only accept deposits from its members.||Credit cooperative societies use the money they raise from members and the broader public to offer loans to the poor at cheaper interest rates.|
|6||Nidhi companies can’t raise funds from the government.||Share capital is used to raise money from society’s members, while the government provides the vast majority of funding.|
|7||The minimum number of members is 7, including 3 directors.||A voluntary organization can be formed by any 10 people and registered with the Registrar of Co-operative Societies.|