Rural cooperative foundation rose in the mid-1980s, and was banned by the State Council in June, 1999 (1, 5438+0). It has experienced ups and downs for more than ten years.

Rural cooperative foundation is a quasi-formal financial organization that mainly relies on farmers' capital injection. Its business activities are under the jurisdiction of the Ministry of Agriculture rather than the People's Bank of China, and it quickly shows that a single spark can start a prairie fire. The operation of most rural foundations violates the purpose of mutual assistance of cooperative foundations, and turns rural foundations into the second rural credit cooperatives that handle deposit and loan business.

By 1996, the deposit scale of rural cooperative funds reached one-ninth of that of rural credit cooperatives. However, due to the ubiquitous high interest rate, chaotic internal management, administrative intervention by grass-roots governments and lack of necessary financial supervision, rural foundations soon experienced large-scale redemption risks, and even a run-on storm occurred in some areas. From 65438 to 0996, the central government issued the Decision of the State Council on the Reform of Rural Financial System, and rural foundations entered the stage of rectification and development. 1997165438+10, the central government decided to comprehensively rectify the rural cooperative foundation. The contradictions accumulated by the rural cooperative foundation itself suddenly became superficial, which triggered events that endangered rural social and political stability in some areas. 1999 1, the State Council issued document No.3, officially announcing the national unified ban on rural cooperative foundations. Rural foundations in various places have been thoroughly cleaned up through the stages of assets verification, classified treatment, debt collection and deposit payment. However, the resulting asset losses are quite serious. The township government applied for a loan from the bank to pay the debts of the foundation, which caused great pressure on the township finance and passed a considerable part of the debt burden on the farmers.