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
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 functions and provide services at three levels:
Short – Term Co-operative Credit Institutions are further divided into three sub-categories:
Apart from these classifications, the co-operative banking structure in India is further divided into five main groups:
Functions of Co-operative Banks
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:
Primary Agricultural Credit Societies (PACS)
These institutions act as a core of Indian Co-operative movement. The main objectives of PACS are:
District Central Co-operative Banks (DCCBs)
The Primary Agricultural Credit societies are affiliated to the DCCBs. The functions of DCCBs are:
State Co-operative Banks (SCBs)
The District Central Co-operative Banks are in turn affiliated to SCBs. The functions of SCBs are:
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:
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:
The Services offered by the Co-operative banks includes:
Co-operative Banks in India are registered under the Co-operative Societies Act and are regulated by Reserve Bank of India.