Each agricultural producer for economic exchange needed cash, especially in the expansion of production. To
withdraw available funds to farms is advisable to organize a union that
a circular responsibility for ensuring that all equipment provided cash
loan. For targeted release of funds should be fully aware of all the information about the borrower and the state of its economy. The
partnership that has received money under the overall responsibility
should provide them to members only on production needs. To
give money is not spent in vain, and were it for production purposes,
it is necessary to know well the borrower and not lose sight of the
state of its economy. F. Raiffeisen outlined rules for charters rural credit cooperatives AV Chayanov reformulated as follows: • circular responsibility of all members of a partnership with all its assets for the debts of the partnership; • Production assignment of loans; • granting of loans to members of the partnership; • small area of the company; • recognition of the board of the Association of honor. The
first rule makes participants with the greatest possible activity
relate to the affairs of his cooperative, monitor his work and create
public opinion in favor of accurate repayments. Production purposes the loan is in itself contains the power to repay the loan. Money
to expand the capital farm, always reinforce the production capacity of
a peasant family, enable its working forces more fully develop its
labor energy and multiply labor income families. The increase in revenue is given full opportunity to repay a loan. Loans device must know the state of the economy and the use of the borrower, which gives them a loan. These conditions are met only if: - The borrower will be known to the board and other members of the cooperative; - Management of the borrower in the sight of the cooperative and available for monitoring them. The
first requirement generates Raiffeisen third principle, according to
which a loan company may provide loans only to its members, and the
third implies the fourth principle, which requires that the area of
the company was possible narrowed. The optimal size of the area of the company is determined by the desire to maybe a smaller size overhead.
Credit Union
