Germany
Co-operative credit providers are believed to have started in
1851 in Germany. In Germany, the orientations of the big commercial
banks towards large scale industries created a gap in financing of
farmers, petty traders, etc., which was filled by setting up of credit
co-operatives. Raiffeisans co-operative bank helped to provide credit
for debt ridden peasant farmers while Delitsch co-operative bank was for
the independent farmers. Both quite independently sought their
solutions through the cooperative credit associations. Raiffeisan banks
were based on village membership so that members knew, and could vouch
for each other. They had no share capital, their farmer members accepted
unlimited liability and their share of profits were not distributed but
put into the reserve. It was from the reserves and the deposits of
local salary earners that the banks accumulated their capital, and loans
were made for productive purposes only, such as seeds, cattle and
ploughs.
At the beginning of German’s Industrialization, these credit
associations emerged with a structure which provided a strong closeness
to their customers. Deposits were quite safe for all creditors and
depositors. This German model has been followed by most peasant
economies in Central and Eastern Europe, Asia, and some African
countries.
France
The orientation of the French commercial banks
towards large-scale industry and commerce, as in Germany, created a gap
in the provision of finance to farmers and craftsmen. In Germany, there
were two major categories of financing associations; a) The co-operative
banks proper, or those financing institutions collectively known as the
banques popularizes (People’s Bank); b) The Credit Agricole – the state
– controlled farmer’s bank – a mutual credit and co-operative
organization. These co-operative banks, the People’s Banks, began about a
century ago and since 1878, they have multiplied all over France. They
are not joint-stock companies as such, but association of persons
putting together their savings, experience, and energies to distribute
credit at a reasonable price from their own funds. But their current
shape began to be formed in 1917 when, by the law of 13 March, 1917 on
“the organization of credits for small and middle sized businesses and
industryâ€, received a specific co-operative status from the French
Parliament.
At this time, also began their vital co-operation with
the societies de caution mutuelles, groups of companies in the same
sector brought together at departmental level to act as guarantors for
loans. The People’s Banks came into existence out of the spontaneous
initiative of artisans, small industrialists, and traders who had the
idea to unite at the local level, to help each other, and to lend each
other money which the big banks refused to them (Tombola, 2009).
Although
they serve as sources of finance for smaller industrialists generally,
their “mission†as far as the government is concerned is to help the
artisans, and they have an important function in administering and
disbursing government funds placed at the disposal of this sector.
Members of the co-operative thrift association pay 10% of their net
profits into a special safeguard fund to come to the rescue of anyone in
difficulties. In order to reinforce their activities of extending funds
to smaller industrialists, the association has a subsidiary called
Sopcomec, which provide funds to members in need of capital.
Intervention includes the taking of minority participations.
The
accessibility of credits to the “small man†and the determinedly
regional character of these associations are noteworthy. Being more than
ever conscious of the fact that the small and middle-sized enterprises
and handicrafts face financial and management constraints, they have
devised a wide range of services to meet their needs, for example they
play the role of counselors and financial advisors. In addition, they
also enter into partnership with enterprises.
