As with co-operative banks, there is broad scope for collaboration and integration between the federal and state governments in the promotion of MGS. The national government will need to set the legal framework in which the guarantee societies will operate and possibly ensure counter-guarantees. State government can also provide public counter-guarantees, in addition to encouraging the establishment of the MGS at the local level. In order not to have the size of their mutual fund reduced by defaulting loans, they will have an interest in providing coverage only for reliable borrowers. In turn, this lowers information asymmetries for the lender.