Co-Operative Movement in Bangladesh

Co-operative movement is a series of planned activities with a common goal. The term usually refers more specifically to the formation of non-profit economic enterprises for the benefit of those using their services. Begun in England in the nineteenth century, the co-operative movement stimulated Bengal in the last decade of the century. At first, some British civilians started it in their districts with considerable success.

On the initiative of the government of Bengal, it was launched with the enactment of the Co-operative Credit Societies Act 1904.The theoretical origin of the co-operative movement is to be traced from the writings of Robert Owen, Louis Blanc, Charles Fourier and others. Colonial Period: The traditional rural credit system collapsed under the weight of the colonial system. Consequently, the rural economy gradually became dependent on an informal credit market dominated by Mahajans (moneylenders). With the commercialization of agriculture under the colonial dictates, rural indebtedness further increased and by the end of the nineteenth century, the agricultural and Artisan classes became almost totally subjected to the control of usurious moneylenders.In view of the rising indebtedness of the peasantry and artisan classes, the colonial state came forward to solve the problem with its own panacea - co-operative societies.

According to the Act of 1904, the co-operative societies were to be established in every district and were required to be managed by members on democratic lines. The general meeting elected a chairman and a committee of management. All decisions as to liabilities, loans, investments, interests, etc. were to be adopted at the general meeting.During the early years of the movement, the societies were financed either by loans from government or from private persons and deposits made by members.

The government loan up to a certain sum was normally interest free. The village-based agricultural credit societies started giving loans to deserving members. Co-operative societies were also set up for fishing and weaving classes, consumers, and in some urban communities. A new Co-operative Act was enacted in 1912 to co-ordinate their activities and to provide for the organization and control of financing agencies.Under the new act central co-operative banks as federations of primary agricultural societies were established in all important towns and ports. In 1918, the Bengal Provincial Co-operative Federation was set up at Calcutta.

In 1922, it was renamed the Provincial Co-operative Bank. Under the India Act of 1919, co-operatives as a sector were made a provincial subject. As a result, the co-operative movement gained great momentum in the 1920s. The total number of rural co-operatives in Bengal in 1906-07 was 222. By 1928, the number rose to 19,742 including 113 central cooperative banks.

Then came the crash in 1929. The worldwide slump affected Bengal too. Almost all the co-operative societies reported large-scale default and crises in their management. While creditors failed to clear their dues, the depositors ran to the co-operative offices to withdraw their money. The co-operative movement received another jerk under the operation of the Bengal Agricultural Debtors' Act 1935, under which debt settlement boards were established to relieve the debtors at the expense of the creditors, including the co-operative societies.

The societies further suffered under the Moneylenders Act 1939, which defined co-operatives as money lending agencies and put them under a number of restrictions. The professional money lenders could well escape the restrictions imposed by the act, but the societies, as institutions, could not. As a result, the co-operative movement, which had picked up so rapidly up to the 1920s, languished. Co-operative loans to individuals in Bengal, which accounted for Rs 16.

9 million in 1928-29, dwindled to Rs 2. 3 million in 1935-36.The movement was further weakened by the impact of the Second World War, the Great Famine of 1943 and the communal disturbances. The Rowland Committee (1945) found that the cooperative movement was almost a corpse. Later, the Credit Enquiry Commission (1950) labelled it as a 'body without a soul'.

To revive the co-operative movement, a Central Co-operative Bank was established in 1948. Under its direction 26,000 village co-operative credit societies were liquidated and in their places were organized the union co-operative multipurpose societies of limited liability.But this new concept of the co-operative movement did not produce the desired result. The number of primary co-operative societies shrank from 32,418 (1947) to 5,589 in 1960.

Pakistan Period: The success and failure of the co-operative movement during the Pakistan period have been investigated by the ILO's Asian Cooperative Field Mission (1955), Credit Enquiry Commission (1959), Food and Agriculture Commission (1960) and academically, by Elliot Tepper of the Michigan State University (1966).All these studies have come to the conclusion that the co-operative movement failed to achieve its desired goal by way of poverty alleviation and credit circulation. The failure has been attributed commonly to the management problems both from the government as well as from the field sides. The Co-operative law and Cooperative Department had been always control-minded rather than dissemination and motivation-minded. The corruption and inefficiencies at primary level was always endemic.

Bangladesh Period: The co-operative ventures were severely affected during the war of liberation. But soon after independence, co-operative ownership was given the highest patronage. Co-operative ownership and state patronage to it have been enshrined in the constitution. Since 1972, two systems of co-operatives are seen to have been practised - traditional co-operatives under the Co-operative Department and new two-tier co-operatives under the Integrated Rural Development Program (IRDP), later institutionalized in the Bangladesh Rural Development Board (BRDB).The IRDP co-operatives followed the Comilla Model. Huge investments were made in both systems.

Consequently, co-operative societies increased phenomenally. The number of co-operative societies increased from 33,566 (1971) to 124,604 by 1988. BRDB is the single largest institution to have farmers co-operatives (KSS) registered under it and the number of such KSS was 65,002 in 1995. BRDB registered co-operative societies of the landless in that year were 34,395, of which 21,554 were of landless women.The Bangladesh Samabaya Bank Ltd (BSBL) has been functioning as the central credit institution in the movement. The BSBL borrowed from the Bangladesh Bank against 25% government guarantee for onward lending to its affiliated central cooperative banks, cooperative land mortgage banks and central sugarcane-growers cooperative societies.

In 1995, the value of all assets of the co-operatives in Bangladesh was Tk 7. 96 billion, of which Tk 2. 75 billion was physical assets, Tk 3. 79 billion was invested assets and Tk 1. 2 billion was cash and bank balances. The co-operatives provided direct employment to 50,721 persons directly in the societies' offices and to 137,464 as field staff.

The primary societies had a total share capital of Tk 621. 9 million, a thrift deposit of Tk 1. 04 billion and a reserve fund of Tk 1. 98 million. A new horizon in the co-operative movement was opened with the establishment of the Bangladesh Academy for Rural Development (BARD) at Kotbari, comilla.

It provided a new model for the co-operative approach to rural development.Its success led the government to organize 30 thousand farmers' co-operative societies and pledge full support to the co-operatives in all fields of economic activity. Government support encouraged the formation of co-operatives in all sectors of the economy at primary and secondary levels. Consequently, the number of co-operatives steadily increased. In 1970, the co-operative strength consisted of 11 national, 249 secondary and 33,306 primary societies, with the individual membership at 2. 49 million.

The national and international experts on the Bangladesh cooperative movement are of the view that the co-operative mind has been considerably developed among the members and managers of the societies. The co-operative societies, thanks to the co-operation of international agencies and the organizations, are now playing an important role in the development drives of Bangladesh. The exclusive co-operatives consisting of women, weavers, fisherman, milk producers, sugarcane growers, etc. have achieved the most notable success in the co-operative movement.