Question

Which of the following describes the working of a cooperative?

• A. Members of a cooperative help in each other's farmlands.
• B. Members of a cooperative pool in their resources.
• C. Members of a cooperative borrow money from moneylenders.
• D. Members of a cooperative help in the repayment of each other's loans.

Answer 1

The correct option is B Members of a cooperative pool in their resources.

A cooperative can be any organisation owned and run jointly by its members, who share the profits or benefits. Cooperatives are one of the major sources of cheap credit.

A cooperative accepts deposits from its members. It uses these deposits as a collateral to obtain a huge loan from a bank. The loan taken by the cooperative acts as the fund that is used to provide loans to its members.