There are evidences that two mutual providence societies with the features of cooperative society existed in Dumbara valley in Kandy and Weligama in Galle. These were the first lending cooperative societies registered under first Cooperative Ordinance 1911 No.2. There were several reasons for establishment of lending cooperative societies in Sri Lanka.

        Sri Lankan village community faced with problem of poverty and indebtedness owing to the commencement of crop cultivation as states instead of prevailed self-sufficient agriculture system after Sri Lanka

became a British colony in 1815. To solve this problem of poverty and indebtedness, a Commission was established under an Englishman named Crowfort. It tried to find solutions to redeem indebtedness by establishing lending societies at village level. As a result of this for the first time lending cooperative ordinance No.12, 1911 came to light.