• Co-operative Banks in India

    Co-operative Banks are government supported financial agency in India, which are organized and managed with the dictum of co-operation, self-help and mutual help. It functions with the “no profit and no loss” model. As other banks in the country, Co-operative banks perform all the basic banking functions like borrowing and lending of credits.

    In India, Co-operative Banks are working for nearly hundred years. Co-operative Banks are considered as one of the important financial institutions in the country. The major contributions of these banks are mostly in rural areas where they play the most vital role in rural financing and micro financing. The major strengths of co-operative banks are their easy local reach, transparent interaction with the customers and their efficient services to common people.

    Objectives of Co-Operative Banks

    • Engage in rural financing and micro financing
    • Main objective is to remove the dominance of common man by the middle man and money lenders.
    • Ensure credit services to farmers at low rate of interest providing socio-economic condition to the people.
    • Provide financial support for the needy people and farmers in the rural areas
    • Provides personal finance services for those engaged in small-scale industries and self-employment driven activities for peoples in rural areas as well as in urban areas

    Categories of Co-operative Banks

    The need of Co-operative banks in India is much important to support the financial requirements of the people. To provide a much established support to every person in the country and for the development of the nation, Co-operative banks are categorized at various dimensions and at various levels.

    The Co-operative Banks can be divided into two categories based on their functions. They are,

    • Long – Term Co-operative Credit Institutions
    • Short – Term Co-operative Credit Institutions

    Long – Term Co-operative Credit Institutions functions and provide services at three levels:

    • State Level
    • District Level
    • Village Level

    Short – Term Co-operative Credit Institutions are further divided into three sub-categories:

    • State Co-operative Banks
    • District Co-operative Banks
    • Primary Agricultural Co-operative Societies

    Apart from these classifications, the co-operative banking structure in India is further divided into five main groups:

    • Primary Urban Co-operative Banks
    • Primary Agricultural Credit Societies
    • District Central Co-operative Banks
    • State Co-operative Banks
    • Land Development Banks

    Functions of Co-operative Banks

    • The Cooperative Banks functions with the objective of fulfilling the credit requirements and needs of people living in the rural and urban areas.
    • Perform multiple activities and functions at large extent to carry out developments and regulation in the society that strengthen the co-operative movements.

    Primary Urban Co-operative Banks (PUCBs):

    The Urban Co-operative Banks are those that function in urban and semi-urban areas. Generally it is referred as Primary Co-operative Banks. The functions of PUCBs are:

    • Lending money to small borrowers and businesses
    • Provide working capital loans and term loans
    • Provide advances against shares and debentures

    Primary Agricultural Credit Societies (PACS)

    These institutions act as a core of Indian Co-operative movement. The main objectives of PACS are:

    • Raising the capital of the bank to provide loans and support for customers
    • Motivating the habit of savings amongst customers and collecting deposits
    • To provide services and inputs to people for their welfare and development
    • To support and motivate various income augmenting activities

    District Central Co-operative Banks (DCCBs)

    The Primary Agricultural Credit societies are affiliated to the DCCBs. The functions of DCCBs are:

    • Act as a support centre for district central financing agencies
    • Arranging credit to primaries
    • Managing banking business
    • Approve, supervise and control implementation of policies

    State Co-operative Banks (SCBs)

    The District Central Co-operative Banks are in turn affiliated to SCBs. The functions of SCBs are:

    • Serve as balancing centre in the States
    • Organise provision of credit for credit worthy farmers
    • Carry out banking business
    • Leader of the Co-operatives in the States

    Land Development Banks (LDBs)

    The LDBs are used to meet the needs of agricultural sector through long term credits. The LDBs functions at two levels. One is the Central LDBs operating at the state level and the other is Primary LDBs operating at district level or taluka level. The functions of LDBs are:

    • Provide services to meet the requirements for developing areas
    • Providing loans on the security of mortgages
    • Raising their resources by floating debentures in the market

    Although, Co-operative banks mainly do business in the agriculture and rural areas, some groups like PUCBs, DCCBs and SCBs operate in semi-urban, urban and metropolitan areas also.

    Products and Services

    The Products offered by the Co-operative banks includes:

    Deposits

    • Savings Bank Account
    • Current Account
    • Recurring Deposit
    • Fixed Deposit
    • Cash Certificate

    Loans

    • Loans to Salaried Employees
    • Home Need Loans
    • Loans to Pensioners
    • Loans under Women Entrepreneur Development Scheme
    • Building Mortgage Loan
    • Education Loan
    • Housing Loan
    • Loan to Physically Challenged Persons

    The Services offered by the Co-operative banks includes:

    • Clearing
    • Safe Deposit Locker
    • Automated Teller Machine (ATM)
    •  Demand Draft / Pay Order

    Regulation

    Co-operative Banks in India are registered under the Co-operative Societies Act and are regulated by Reserve Bank of India.

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