There is a People’s Bank in China which has initiated the credit cooperative scheme. This is the sanctioned cooperative union which enables the citizens to get credit. This is provided on tenure system.
Creation of Credit Cooperatives
The establishment of the Credit Cooperatives scheme was created in 1950s and since then it has been serving people by providing them credit on loan basis. At the time of inception of the credit cooperative scheme, there was no such commercial enterprises or banks which could favor the credit offering the citizens on loan basis. Rather than relying on banks, the credit cooperative scheme helps in channeling the credit between the state and people in rural areas. This scheme was basically aimed on channeling the money among people belonging to the rural areas.
Impact of economic reforms
It was in late 1970s when the reforms were introduced in the economic sector and this enabled the entrepreneurship on individual basis. As a result the creation and collection of collective enterprises was made possible. As a result of this, the functioning of RCC was made possible at grass roots levels. Further the provision of credits and saving accounts was made possible by the families and other collective enterprises.
Credit Cooperative Associations
There are various individuals and enterprises which introduce the credit cooperative associations. In these cases, people often opt for some other sources of credit. However some people and agencies consider this as illegal forms of credit acquirement. Some of these credit forms and services are tolerated in some specific cases. If the credit cooperative schemes are introduced by commercial banks, then this is legal and a few percentages of loans are taken from the state banks. Usually the private entrepreneurs receive less than one percent loans from the commercial banks.Initially the credit cooperative schemes were introduced in China and later on these organizations were banned till 1998. This was followed by the issuing of cancelation of illegal financial activities on individual and enterprise basis. There is a specific scheme of credit cooperative introduced both the rural and town ship level schemes. This has led to the development of many commercial banks.