CO-OPERATIVE BANKS IN INDIA :
The Co operative banks in India started functioning almost 100 years ago. The Cooperative bank is an important constituent of the Indian Financial System, judging by the role assigned to co-operative, the expectations the co operative is supposed to fulfill. their number, and the number of offices the cooperative bank operate.
Though the co-operative movement originated in the West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The cooperative banks in India plays an important role even today in rural financing. The businesses of cooperative bank in the .urban areas also has increased phenomenally in recent years due to the sharp increase in the number of primary cooperative banks.
Co-operative Banks in India are registered under the Cooperative Societies Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co¬operative Societies) Act, 1965.
Co-operative banks in India finance rural areas under:
• Farming
• Milk
• Personal finance
Cooperative banks in India finance urban are as under:
• Self-employment
• Industries
• Small scale units
• Home finance
• Consumer finance
• Personal finance
Some facts about Cooperative Banks in India
• Some Cooperative Banks in India are more forward than many of the state and private sector banks.
• According to NAFCUB the total deposits and lending of Cooperative Banks in India is much more than old Private Sector Banks and also the new Private Sector Banks.
• This exponential growth of Co operative Banks in India is attributed mainly to their much better 1ocalr reach, personal interaction with customers, their' ability to catch the nerve of the local clientele.
The Co-operative Banks also perform the basic functions of banking but differ from the commercial banks in many respects as follows:
1. The commercial banks have been organised either as joint stock companies under the Companies Act, 1956, or as public corporations under separate Acts of Parliament. The Co-operative banks have been established under the Co-operative Societies Acts' of different States.
2. The Co-operative banks have a three-tier set¬up. The State Co-operative Bahk is the apex instituion in a State. while Central/ District Co-operative banks function at the district level and Primary Credit Societies work at the village level. The commercial banks are organised on a unitary basis. :
3. Only the State Co-operative Banks have access to the Reserve Bank of India. whereas every commercial bank which is a scheduled bank is entitled to avail of the refinance facilities from the Reserve Bank of India.
4. Co-openitive banks function within a given area. Their operations are restricted to a particular State in-case of a State/Apex Bank. a particular district in case of a district Co-operative bank and to a local area in case of a society. The commercial banks. on the other hand. function over a wide area which is not limited by the boundaries of a particular State or district. Most of them have branches over a number of States and many of them allover the country.
5. Till 1969 the commercial banks were urban-oriented and financed organised trade and industry. The co-operative banks have been basically rural-oriented and have been financing agricultural and allied activities.
6. The commercial banks are governed by all the sections of the Banking Regulation Act. 1949. but only some of the sections of this Act are applicable to co¬operative banks. Thus the control of the Reserve Bank is partial over the co-operative banks.
7. Co-operative banks proceed on the principle of co-operation. whereas commercial banks function on sound business principles. The former are. therefore. granted accommodation at concessional rate by the Reserve Bank of India
