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Financial Cooperative
A financial cooperative is such kind of financial institute which is owned and operated
by its members. The goal of a financial cooperative is to act on behalf of a unified
group as a traditional banking service. These institutions attempt to differentiate
themselves by offering above-average service along with competitive rates in the
areas of insurance, lending and investment dealings. Literally, the word co-operative
means working together for mutual benefits. From economic point of view, co-
operative is a voluntary association of people established by an economically weak
persons for the betterment of their economic condition through mutual help. It is
based on the concept that economic conditions of the weaker sections of the people
can be improved by co-operation, but not by competition. As such persons living in
the same locality and having common needs join together in the form of association,
known as co-operative organization for mutual benefit. As this is a co-operative
organization, profit motive is missing and it is replaced by service motive. In case
there is surplus, it is distributed among the members equitably on the basis of per
member but not per share. Every member in co-operative has the sentiment of ‘we'
instead of 'I' and let’s do work for ourselves’. Every member in co-operative has equal
voting rights. Generally the persons belonging to a certain locality, region or group
form a co-operative society for the promotion of their common economic, educational
and social needs. They join together for business with the principle of equality and
mutual help. It is a democratic organization established with equal contribution from
all its members. In co-operative organization people can enter into and exit from there
at their own wish but they cannot transfer their shares to another party.
The first co-operative organization was initiated by Robert Owen in 1844 A.D. named
as “Rochdale Society of equitable pioneers”. The main objective of this society was to
save poor people by providing goods at cheaper rates than the market by eliminating
middle man and provide better service to its members.

According to Prof. Henry Clavert, “Co-operative society is the form of
organization in which person voluntary associated together as human beings
on the basis of equality for the promotion of economic interests of themselves.”

Thus, co-operative organization is a voluntary association of people or group living
in the same region having limited means, common interests and who are willing to
improve their economic condition through mutual co-operation and investment. It is
guided by the principle of “All for each and each for all.” i. e. a democratic set up by
which the common interest of the members are served. All co-operative organizations
of Nepal must be registered in accordance with the Co-operative Act 2048 B.S. (revised
2056).

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