Operations of the Credit union in NTT

Since the beginning of this year , I have been following up the Business trends in Flores, I realized there is a lot of potential Flores to be like other parts of Indonesia, Its endowed with Human capital and the Resources that are not tapped at all , Most people are have good education background compared to the developing economies, frankly speaking Indonesia is Moving towards the State of being an Economic power But the Big question will remain Why All parts of Indonesia are not growing at the Same Pace? There is a need to get out of our comfort Zone and take control of Our generation, then How can we do it without Money, This is important to understand that the Magnitude of Cooperatives in Championing the Will of the people cannot be Under estimated , Because Most of the time when people are asked why they are not opening up their own business they will say that they don’t have the money to do so then why don’t join the group with the same cause and aspiration and move the world in the most amazing ways , there are many reasons why cooperatives address the problems of the poor, if developed economies have taken a lid in the cooperative, why then do not joim the cause for the better future
 Actually when you make deep compulsion between the banks and cooperatives, you will realize how cooperatives have a great deal to the growing community , What you have to know before you shop for a loan, The amount of your loan payment, including principal, interest and fees
 The source of income and/or savings you have to make those payments
When you will actually get the loan money in your hands( will it be before you need, In the due comparison, The interest rate of saving is actually higher and the Interest on loans lower than a commercial bank
Cooperatives can play a significant role on economic development, especially in rural areas where absence of large spending power does not attractive private investment to harness local skills and resources that can uplift the local economy living standards besides exporting produce to distant customer locations in cities. Cooperatives of farmers enable consolidation of fragmented land, investment in mechanization and irrigation, better bargaining power to buy seeds and fertilizers cheaply, arrange for proper common storage and greater bargaining power in selling farm produce to traders as also make banks comfortable in providing agricultural credit, thereby improving the productivity of agriculture and improving the incomes of farmer members of the cooperatives. Cooperatives if fishing/ agric culture, animal husbandry and dairy, residential housing, and other economic activities can contribute similarly to economic development.
Development of rural communities has benefited greatly from the resurgence of interest
in the cooperative form of business. Well-planned business development is often
the throttle for vibrant community development. As user-owned organizations, cooperatives
have been used as a model for individual self-help and empowerment that
strengthens bonds leading to greater community awareness and involvement. They
have been created in response to the felt needs of agricultural producers and other
rural residents faced with rapidly changing forces that affect their livelihoods and wellbeing.
Cooperatives not only provide access to markets not otherwise reached, but
also provide member-owners with an opportunity to improve incomes and services.
The success of these voluntarily owned and controlled businesses helps build needed
Infrastructure that increases community vitality and ultimately benefits all members in

Why are we interested in cooperatives and their relationship to communities?—
Cooperatives are businesses that belong to the people who use them and follow three fundamental principles in their operations:
_ Each member has one vote in the decision-making process, regardless of financial investment.
_ The business is owned by those who use it.
_ Earnings are returned to members in proportion to how much they've used the cooperative.
These three principles exemplify the differences between cooperatives and investor-oriented corporations (IOFs). In IOFs, earnings are returned in proportion to investment and control of the organization is based on share ownership.
In Indonesia, 27.5% families representing approximately 80 million individuals are members of co-operatives. (Source: Ministry of Co-operative & SMEs, Indonesia,2004) where they provide jobs to 288,589 individuals. (Source: Ministry of Co-operative & SMEs, Indonesia, 2004) Cooperatives generate more than $100 billion in annual economic activity. They are represented in every sector of the economy, including agriculture, health, finance, utilities, housing, and retail. In short, cooperatives are a significant economic force in the Nation.
Cooperatives have a unique relationship to their community. Because they belong to the people who use them, they are firmly grounded in the region they serve. Decisions about services and operations are made at a local level, so cooperatives have little incentive to leave their communities. Like any other businesses, cooperatives pay taxes to the central government and contribute to local economic development
The positive impact of cooperatives on the local economy is strengthened by the fact that net earnings are returned to members, who usually reside in the local community. Finally, the cooperative structure requires and encourages an attitude of self-help and initiative, in a community context.
"When the idea of a cooperative comes in contact with felt needs and the readiness of people to act, it takes root, grows and flourishes. The association of people and enterprise forms a symbiotic relationship of mutual support… and the business prospers," according to the International Joint Project on Cooperative Democracy.
The five cooperatives profiled in this report were chosen to capture the some examples Cooperatives in NTT region have done: full story......

BANKING INSTITUTION IN INDONESIA

Banks are special and therefore must run business based on prudential principles. The functions of banks in Indonesia are basically as financial intermediary that take deposits from surplus units and channel financing to deficit units. According to Indonesian banking law, Indonesian banking institutions are typically classified into commercial and rural banks. Commercial banks differ with rural banks in the sense that the latter do not involve directly in payment system and have restricted operational area. In term of operational definition, bank in Indonesia are classified into non-syariah and syariah-based principles commercial banks

Credit unions have the responsibility to their members to run daily operations in a responsible manner that protects member deposits and the integrity of the institution. Best practices in operational standards include adherence to generally accepted accounting principles, transparency in accounting and operations and implementation of internal control policies and procedures that protect the institution against employee and member risk. Financial management standards are critical to the operations of a credit union so that managers and directors can set a plan for the financial operations of an institution and monitor progress against that plan.

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