Cooperative banks in India
- Co-operative bank was set up by passing a co-operative act in 1904. They are organised and managed on the principal of co-operation and mutual help. The main objective of co-operative bank is to provide rural credit.
- The Co-operative Banks in India are governed as per the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1955.
- The Cooperative Credit Societies Act, 1904, was the first step taken for the co-operative society, which got accelerated with the introduction of the Cooperative Societies Act of 1912.
- In post-independent India, Central Committee for Cooperative Training (1953) was set up by RBI for establishing co-operative training centres.
- To solve the issue of the financial crisis in the rural areas, Rural Credit Survey Committee was set up 1954.
- This co-operative movement spread through the banking sector as well and by 1950s, Co-operative Banks had started extending their reach to the public in both rural and urban areas.
- These Banks have been opened with the motto of ‘no-profit-no-loss’ and thus, do not seek for profitable ventures and customers only. As the name suggests, the main objective of Co-operative Banks is mutual help.
- They work on the principle of ‘one person, one vote’. Since these banks are owned by the members, a Board of Directors is chosen democratically and then they are responsible for controlling the Organisation.
- Farmers can avail agricultural loans on minimum interest rates from the Co-operative Banks.
- Providing easy and accessible loans and credit benefits in the rural areas with scarce banking facilities.
- The annual profit earned is spent on financial reserves and required resources and a part of it is distributed among the Co-operative members, as per the prescribed limitations.
They can be divided into two types, which can further be subdivided:
a) Urban Co-operative Banks (1510 banks)
Urban cooperative banks provide services to urban and rural areas. Urban cooperatives banks raise their working capital from share capital contributed by cooperative societies, deposits, borrowings and other sources.
• Non-Scheduled UCBs (1458 banks)
• Scheduled UCBs (total 52 banks)
b) Rural Co-operative Banks
• State Cooperative Banks (34 total out of which 24 scheduled and 10 non-scheduled)
State cooperative banks are state-owned cooperative banks. State cooperative banks also raise their working capital from share capital contributed by cooperative societies, deposits, borrowings and other sources. State cooperative banks manage the urban cooperatives banks by accepting deposits and granting loans. Urban cooperative banks are not allowed to accept surplus cash from each other. They route the cash flow through state cooperative banks.
- District Central Cooperative Banks
- Primary Agricultural Credit Societies
Single-state UCBs are regulated by State Registrars of Co-operative Societies (RCS) and multi-state UCBs are governed by Central Registrar of Co-operative Societies (CRCS).
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