The interview is also a fascinating look into a newly independent India's early attempts to extending finance to all. Dr KC Chakrabarty was talking about the need to revive co-ops as a way to push financial inclusion. At that time, he said that while he knows how to push banks into rural areas, he is not so conversant on how to revive the coops... First, we need to realise that some businesses are so badly off they need to be folded up. Does every cooperative have to be revived? No, if there are such gone cases, please let them go. Across the country, across 6 lakh villages, you have about 100,000 primary agricultural credit cooperatives (PACs), and you have Co-op Central Banks and you have State Co-op Banks. Now, these PACs were started in 1904 to be pure thrift and credit co-ops. They were supposed to save regularly and lend to members from their own savings. Over a period of time, they became very strong financial institutions. Which is what happened the world over.
In Europe, in North America, in Canada, in Germany, France, you have the most wonderful rural and urban credit unions. All based primarily on member savings and lending to members. These co-ops continue to flourish. In some areas, they have become like banks in more recent years. They were allowed to take the savings of the public at large. They participate in clearning house, their debit cards are accepted, and so on. So, even though, they are very much member-driven organisations, they have linked up with the larger financial system. Given that in economically advanced countries, there is a need for such organisations, it is obvious that in India, there is even more reason why we need such institutions. After all, if you are talking about a place where everyone is literate, has access to
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