The Federation of Savings and Credit Cooperatives of Thailand Limited (FSCT)


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Cooperative in Thailand -> Type of Cooperative ->Saving and Credit Cooperative

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Saving and Credit Cooperatives are those whose members are people having the same occupation or living in the same community. Its main purpose is to promote savings among members and provide loans for productive investment.

Backgound
The consistently increasing living cost has brought a big burden to the low-income people. Because they never seem to earn enough to cover their daily needs. They tend to deal with this problem through the moneylenders who charge them very high interest rates. By so doing their indebtedness is increased even more and the situation becomes more serious to them.

However, this money problem is lessening when they join together under the cooperative principles of self-help and mutual help. The first cooperative in this regard was formed among officials of the Cooperative Promotion Department and employees of the Bank for Agriculture and Agricultural Cooperatives (BAAC). It was registered on 28 September 1949 as the Cooperative Officials' Cooperative Limited, which is presently named the Cooperative of Cooperative Officials, Ltd. On the other hand, the Soon Klang Thewa Credit Union Cooperative was established as the first community savings cooperative in the slum area of Huay Kwang and Din Daeng districts, Bangkok on 17 July 1965.

Objective
Being as financial institution, the specific objectives of Saving and Credit Cooperatives are aimed to:

1. Encourage thrift among members. To encourage saving habit, the cooperative currently offers two types of savings:-

1.1) Shares: All members are required to pay monthly shares at rates agreed by both the members and their cooperatives. The shares may be deducted directly from monthly salaries. Dividends can be paid to members at rates specified by without tax deductions. When resigning form a cooperative, the member can withdraw his/her shares.

1.2) Deposits: Both current and fixed deposits are generally offered to cooperative members. Interests on these deposits may be equal to, or higher than commercial bank rates depending on the financial status of each cooperative.

2. Provide loan services to members. Members' shares and deposits comprise significant part the loan funds made available to members with interest charged usually at rates lower than that of the prevailing market rates. The general three types of loans provided by this cooperative type are:

2.1) Emergency loans: In crisis or emergency cases, a member may borrow up to half of his/her monthly income, depending on the cooperative financial status, without collateral. Repayment is normally made in two installments.

2.2) Ordinary loans: The cooperative can provide an ordinary loan, again, depending on its financial status. This can be between 4 to 15 times, of member monthly incomes or within the range of baht 40,000 to 300,000 with one other member acting as guarantor. Normal repayment in this regard is ranged from 24 to 72 installments. The maximum amounts allowed for emergency and ordinary loans are based on the average amount of members' incomes.

2.3) Special loans: When the cooperative extends its services to housing and investment purposes, a member may borrow the actual amount required for constructing or purchasing houses, land and other permanent investments, generally, not exceeding the ceiling amount of between baht 400,000 to 1,000,000. Repayment period is between 10 to 15 years, using real property as collateral.

Cooperative Operations
After a Saving and Credit Cooperative is formed, the members will elect their representatives at the annual general assembly as board of director to administer cooperative businesses. The Board meets at least once a month to determine operational policies to be implemented by the cooperative staff. The staff normally includes a manager, an assistant manager, accountants, bookkeepers, etc., depending on the cooperative size and financial situation.
Saving and Credit Cooperatives raise capital funds through shares, deposits, reserve funds, loan funds, and support fund or donations.

Rights and responsibilites
In its essence, a cooperative belongs to its members. Effective and efficient management of the cooperative is ensured when members exercise their rights and responsibilities properly. The most important responsibility of the individual member is attendance at the annual general assembly (AGA). The AGA gives him/her the opportunity to protect membership rights, a fair sharing of benefits and monitor cooperative operations. It provides also a forum to determine general policies, elect committee members and assign tasks to further benefit all the members. Within the framework of cooperative principles, laws and regulations and procedures, members must discuss problems together, share ideas and exercise the right to vote on committees and meeting resolutions.