In India, the Co-operative movement was started after the enactment of “The Co-operative Credit Societies Act, 1904 (Act Xof 1904)”. On 25th March, 1904 the Bill was passed and on 26th March, 1904 it was published in the Gazette of India. Hence, the year 2004 is being celebrated as the Centenary Year of the Co-operative Movement in India. With that Act, the Co-operative emerged in India as a State sponsored/promoted institution. The main objective was to relieve the poor agriculturists from the clutches of cruel moneylenders.

What was the background?
During the 19th century, agriculture was fully dependent on nature and productivity was very low. In that century, famine occurred in 1861, 1866, 1873 and 1876, and agriculturists were hard hit. Moneylenders and Mahajans used to charge 37% to 76% interest on lending. The farmers used to take the loan from the Mahajans under compulsion, but in many cases were unable to repay the same. The oppression was unbearable and the farmers started becoming violent. In 1875, they attacked the moneylenders at Pune and Ahmednagar in the West and in Decan (Southern Part of India).

Considering the gravity of the situation, the then British Government took the following steps to mitigate the inhuman sufferings of the agriculturists at large: –

01) Passed the Decan Agricultural Relief Act in 1879.

02) Constituted the Indian Femine Commission in 1880.

03) Passed Land Improvement loans Act, 1883, and

04) Introduced Agriculturists’ Loans Act, 1884.

But, all these efforts failed to meet the needs and demands of the poor farmers.

Meanwhile, Femine Commission received suggestions of establishing agricultural banks and mutual credit societies. In 1901, the Commission remarked, …”the time for palliative measures has passed”. However, during this period (1885 – 1903) few mutual loan associations were formed in Punjab, United Province (UP), Madras and Bengal. These were registered under General Societies Registration Act 1860. A proposal of setting up an agricultural bank in Pune was turned down by the then Government.

In 1892, Lord Wenlock, Governor of Madras, directed Mr. Frederic Nicholson, ICS, the then Collector of Madras, to study the problems of the agriculturists and submit his report. Mr. Nicholson summed up his report with two words “Find Raiffeisen”.

Mr. FW Raiffeisen (1818 – 1888), Mayor of Weyer Busch, Germany established the first ever Agricultural Credit Bank of the World in Germany in 1862. By the words “Find Raiffeisen” Mr. Nicholson suggested formation of agricultural credit banks of German model. He was asked by the Madras Government to establish few such banks on experimental basis. The result was encouraging.

In 1901, the then Government of India constituted a committee to examine the opinions on such banks. In July 1901, the committee came to a conclusion of establishing Co-operative credit societies. The Draft Bill was prepared on the model of English Friendly Societies and Industrial and Provident Societies Act.

Finally, the bill was passed as “The Co-operative Credit Societies Act, 1904” on 25th March, 1904. The Triplican Urban Co-operative Society, Madras was registered first under this act.