Kerala Cooperative Movement and Banking — KSFE, Chitty, Cooperative Banks

Kerala has one of the strongest cooperative movements in India. The cooperative sector touches banking, housing, marketing, dairy, and chit funds, making it a key PSC topic.

History of Cooperatives in Kerala

Year	Event
1904	Cooperative Societies Act passed by British Government (all-India)
1914	First cooperative society in Kerala region — Kanjirapally Service Cooperative Bank (Kottayam)
1914	Travancore Cooperative Societies Act
1932	Cochin Cooperative Societies Act
1956	Kerala formation; cooperative movement strengthened under state government
1969	Kerala Cooperative Societies Act (unified law for the state)
1969	Kerala State Cooperative Bank (KSCB) — apex cooperative bank
2000	Kerala Cooperative Societies (Amendment) Act — modernised governance

Structure of Cooperative Credit System in Kerala

Three-Tier Structure

Level	Institution	Role
Apex (State level)	Kerala State Cooperative Bank (KSCB)	Provides funds to district banks; coordinates system
District level	District Cooperative Banks (DCBs) — 14 in Kerala	Channel credit from KSCB to primary societies
Primary level	Primary Agricultural Credit Societies (PACS) and Service Cooperative Banks	Direct lending to farmers and members

Kerala State Cooperative Bank (KSCB)

Aspect	Details
Established	1914 (as Travancore Central Cooperative Bank); reorganised post-1956
HQ	Thiruvananthapuram
Role	Apex bank; coordinates all cooperative banks in the state
Affiliation	Member of NABARD system

Types of Cooperative Societies in Kerala

Type	Examples	Function
Credit cooperatives	PACS, Service Cooperative Banks, Urban Cooperative Banks	Provide loans to members
Marketing cooperatives	Kerala State Cooperative Marketing Federation (MARKETFED)	Marketing of agricultural produce
Consumer cooperatives	Consumerfed (Kerala State Cooperative Consumers Federation)	Runs Maveli Stores (subsidised essential goods)
Housing cooperatives	Cooperative Housing Societies	Housing loans and construction
Labour cooperatives	Labour Contract Cooperative Societies	Employment for manual workers
Dairy cooperatives	Milma (Kerala Cooperative Milk Marketing Federation)	Milk procurement, processing, marketing
Coir cooperatives	Coirfed (Kerala State Cooperative Coir Marketing Federation)	Coir product marketing
Rubber cooperatives	Rubco (Kerala State Cooperative Rubber Marketing Federation)	Rubber marketing and processing

KSFE — Kerala State Financial Enterprises

Aspect	Details
Established	6 November 1969
HQ	Thrissur
Type	Government of Kerala undertaking (not a cooperative society but state enterprise)
Main business	Chitty (Chit fund) — largest chit fund company in India
Other services	Gold loans, fixed deposits, housing loans, NRI chitties
Branches	600+ across Kerala and other states
Significance	KSFE chitty is the most trusted chit fund in Kerala; heavily used by middle class

What is Chitty (Chit Fund)?

Aspect	Details
Definition	A rotating savings and credit scheme where members contribute a fixed amount periodically
How it works	At each auction, one member bids the lowest amount and receives the pot; the discount (difference between chitty value and bid) is shared among all members as dividend
Duration	Depends on number of members (e.g., 40 months for 40 members)
Regulated by	Chit Funds Act, 1982 (Central) and state regulations
KSFE advantage	Government-backed, so very low default risk

Consumerfed and Maveli Stores

Aspect	Details
Full name	Kerala State Cooperative Consumers Federation Ltd
Established	1965
HQ	Thiruvananthapuram
Maveli Stores	Chain of retail outlets selling essential commodities at subsidised prices
Operates heavily during	Onam season (Onam kits) and festival periods
Items sold	Rice, sugar, cooking oil, spices, pulses at below-market rates

Milma — Kerala Cooperative Milk Marketing Federation

Aspect	Details
Established	1980 (under Operation Flood/White Revolution model)
HQ	Thiruvananthapuram
Model	Based on Amul (Gujarat) pattern — three-tier: village societies, district unions, state federation
Three Regional Unions	Thiruvananthapuram (TRCMPU), Ernakulam (ERCMPU), Kozhikode (MRCMPU)
Brand	Milma (well-known dairy brand in Kerala)
Products	Milk, curd, ghee, ice cream, flavoured milk

Kerala Cooperative Movement — Key Achievements

Indicator	Status
Cooperative membership	Among highest per capita in India
Share of cooperative credit	Cooperatives handle a major share of agricultural credit in Kerala
Service cooperatives	Present in almost every panchayat
Literacy and awareness	High literacy rate supports cooperative governance
Women’s cooperatives	Growing — many Kudumbashree units linked to cooperative sector

Urban Cooperative Banks in Kerala

Aspect	Details
Regulated by	RBI (for banking functions) and State Registrar of Cooperatives (for management)
97th Amendment (2011)	Gave constitutional status to cooperative societies; added Part IXB and DPSP Article 43B
Major urban cooperative banks	Kerala State Cooperative Urban Bank, various district urban banks

Key Legislation

Law	Purpose
Kerala Cooperative Societies Act, 1969	Governing law for cooperatives in Kerala
Chit Funds Act, 1982	Central law regulating chit funds
NABARD Act, 1981	NABARD refinances cooperative banks
97th Constitutional Amendment, 2011	Fundamental right to form cooperatives; added Part IXB
Multi-State Cooperative Societies Act, 2002	For cooperatives operating in more than one state

PSC-Focused Quick Recall

Question Pattern	Answer
KSFE headquarters	Thrissur
KSFE established year	1969
Largest chit fund company in India	KSFE
Milma established	1980
Milma is based on which model	Amul (Gujarat) pattern
Consumerfed runs	Maveli Stores
Apex cooperative bank in Kerala	Kerala State Cooperative Bank (KSCB)
Three-tier cooperative credit structure levels	State (KSCB), District (DCBs), Primary (PACS)
First cooperative society in Kerala	Kanjirapally (1914)
97th Amendment relates to	Cooperative societies (Part IXB)
Chit Funds Act year	1982
Rubco deals with	Rubber marketing
Coirfed deals with	Coir products
KSFE chitty is regulated under	Chit Funds Act, 1982