Thrift and Credit Cooperatives
Thrift and Credit Cooperatives (Savings Cooperatives)
Thrift and Credit Co-operatives or Savings Cooperatives and set up to promote savings and provide loans among members. Generally in Thailand they formed by occupational basis of members but for those forming by community basis will be named as Credit Unions.
The first occupational base co-operative was formed among officials of the Co-operative Promotion Department and employees of the Co-operatives Bank in 1949 in order to solve the severe problems. The consistently increasing living cost has brought a big burden to the low income people not only farmers but cover to others such as government officials. They tend to deal with this problem through the money lenders who charge them very high interest rates. By so doing their indebtedness is increased even more and the situation becomes more serious to them.
For the first community saving cooperative, the Soon Klang Thewa Credit Union Co-operative was established in the slum area in Bangkok in 1965. This for solving the poorest people’s problems as mentioned above. They are in different occupations but living in the same area.
Objective and Main Activities
As a financial institution, the specific objectives of Thrift and Credit Cooperatives and aimed to encourage thrift and providing loans among members.
To encourage saving habit, the cooperative operate in two ways. The first is forced savings by accumulating in share capital based on monthly income. The second is depositing as current and fix deposits. These savings will be benefited in term of dividend for share and interest income for deposits.
In providing loans to members, in general there are three types of loans provided they are:1) Emergency loans for crisis or emergency cases, 2) Ordinary loans for general purpose but subject to the net monthly income and the individual characteristics and 3) Special loans – usually providing for real estate ownership. The interest expense is charged in fair rate.
According to these aims, the cooperative operates in a financial sector and has two main activities; savings and providing loans. But for progressive savings cooperatives today they involve more in members’ welfare and social responsibilities.
The aggregate business volume of savings cooperatives during 1990 to 2001 is shown in Figure 10, and the average business volume (per member) is shown in Figure 11, Both activities are clearly obtained the increasing trend as shown.