Cooperative banking is commercial banking organized on a cooperative basis.

Cooperative banking institutions take deposits and lend money in most parts of the world. Cooperative banking includes mutual savings banks, building societies and cooperatives.

Types & Function of Co-operative Banks in India

The co-operative banks are small-sized units which operate both in urban and non-urban centers. They finance small borrowers in industrial and trade sectors besides professional and salary classes. Regulated by the Reserve Bank of India, they are governed by the Banking Regulations Act 1949 and banking laws (cooperative societies) act, 1965. The co-operative banking structure in India is divided into following 5 categories:

Primary Co-operative Credit Society

The primary co-operative credit society is an association of borrowers and nonborrowers residing in a particular locality. The funds of the society are derived from the share capital and deposits of members and loans from central cooperative banks. The borrowing powers of the members as well as of the society are fixed. The loans are given to members for the purchase of cattle, fodder, fertilizers, pesticides, etc.

Central Co-operative Banks

These are the federations of primary credit societies in a district and are of two types-those having a membership of primary societies only and those having a membership of societies as well as individuals. The funds of the bank consist of share capital, deposits, loans and overdrafts from state co-operative banks and joint stocks. These banks provide finance to member societies within the limits of

the borrowing capacity of societies. They also conduct all the business of a joint stock bank.

State Co-operative Banks

The state co-operative bank is a federation of central co-operative bank and acts as a watchdog of the co-operative banking structure in the state. Its funds are obtained from share capital, deposits, loans and overdrafts from the Reserve Bank of India. The state co-operative banks lend money to central co-operative banks and primary societies and not directly to the farmers.

Land Development Banks

The Land development banks are organized in 3 tiers namely; state, central, and primary level and they meet the long term credit requirements of the farmers for developmental purposes. The state land development banks oversee, the primary land development banks situated in the districts and tehsil areas in the state. They are governed both by the state government and Reserve Bank of India. Recently, the supervision of land development banks has been assumed by National Bank for Agriculture and Rural development (NABARD). The sources of funds for these banks are the debentures subscribed by both central and state government. These banks do not accept deposits from the general public.

Urban Co-operative Banks

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary co-operative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today. These banks were traditionally centered on

communities, localities, work place groups. They essentially lend to small borrowers and businesses. Today, their scope of operations has widened considerably.

The origins of the urban co-operative banking movement in India can be traced to the close of nineteenth century. Inspired by the success of the experiments related to the co-operative movement in Britain and the co-operative credit movement in Germany, such societies were set up in India. Co-operative societies are based on the principles of cooperation, mutual help, democratic decision making, and open membership. Co-operatives represented a new and alternative approach to organization as against proprietary firms, partnership firms, and joint stock companies which represent the dominant form of commercial organization. They mainly rely upon deposits from members and non-members and in case of need, they get finance from either the district central co-operative bank to which they are affiliated or from the apex co-operative bank if they work in big cities where the apex bank has its Head Office. They provide credit to small scale industrialists, salaried employees, and other urban and semi-urban residents.

Functions of Co-operative Banks

Co-operative banks also perform the basic banking functions of banking but they differ from commercial banks in the following respects

1. Commercial banks are joint-stock companies under the companies act of 1956, or public sector bank under a separate act of a parliament whereas co-operative banks were established under the co-operative societys acts of different states.

2. Commercial bank structure is branch banking structure whereas co-operative banks have a three tier setup, with state co-operative bank at apex level, central /

district co-operative bank at district level, and primary co-operative societies at rural level.

3. Only some of the sections of banking regulation act of 1949 (fully applicable to commercial banks), are applicable to co-operative banks, resulting only in partial control by RBI of co-operative banks and

4. Co-operative banks function on the principle of cooperation and not entirely on commercial parameters.

Problems of Co-operative Banks

Duality of control system of co-operative banks

However, concerns regarding the professionalism of urban co-operative banks gave rise to the view that they should be better regulated. Large co-operative banks with paid-up share capital and reserves of Rs.1 lakh were brought under the purview of the Banking Regulation Act 1949 with effect from 1st March, 1966 and within the ambit of the Reserve Banks supervision. This marked the beginning of an era of duality of control over these banks. Banking related functions (viz. licensing, area of operations, interest rates etc.) were to be governed by RBI and registration, management, audit and liquidation, etc. governed by State Governments as per the provisions of respective State Acts. In 1968, UCBs were extended the benefits of deposit insurance.

Towards the late 1960s there was debate regarding the promotion of the small scale industries. UCBs came to be seen as important players in this context. The working group on industrial financing through Co-operative Banks, (1968 known as Damry Group) attempted to broaden the scope of activities of urban co-

operative banks by recommending these banks should finance the small and cottage industries. This was reiterated by the Banking Commission in 1969.

The Madhavdas Committee (1979) evaluated the role played by urban cooperative banks in greater details and drew a roadmap for their future role recommending support from RBI and Government in the establishment of such banks in backward areas and prescribing viability standards.

The Hate Working Group (1981) desired better utilization of banks surplus funds and that the percentage of the Cash Reserve Ratio (CRR) & the Statutory Liquidity Ratio (SLR) of these banks should be brought at par with commercial banks, in a phased manner. While the Marathe Committee (1992) redefined the viability norms and ushered in the era of liberalization, the Madhava Rao Committee (1999) focused on consolidation, control of sickness, better professional standards in urban co-operative banks and sought to align the urban banking movement with commercial banks.

A feature of the urban banking movement has been its heterogeneous character and its uneven geographical spread with most banks concentrated in the states of Gujarat, Karnataka, Maharashtra, and Tamil Nadu. While most banks are unit banks without any branch network, some of the large banks have established their presence in many states when at their behest multi-state banking was allowed in 1985. Some of these banks are also Authorized Dealers in Foreign Exchange.

Categories There are two main categories of the co-operative banks. (a) Short term lending oriented co-operative Banks - within this category there are three sub categories of banks viz state co-operative banks, District co-operative banks and Primary Agricultural co-operative societies.

(b) Long term lending oriented co-operative Banks - within the second category there are state cooperatives and rural development banks.

The co-operative banking structure in India is divided into following main 5 categories: Primary Urban Co-op Banks Primary Agricultural Credit Societies: The Primary Co-operative Credit Society is an association of borrowers and non-borrowers residing in a particular locality. The funds of the society are derived from the share capital and deposits of members and loans from central co-operative banks. The borrowing powers of the members as well as of the society are fixed. The loans are given to members for the purchase of cattle, fodder, fertilizers, pesticides, implements, etc.

District Central Co-op Banks: These are the federations of primary credit societies in a district and are of two types those having a membership of primary societies only and those having a membership of societies as well as individuals.

The funds of the bank consists of share capital, deposits, loans and overdrafts from state co-operative banks and joint stocks. These banks finance member societies within the limits of the borrowing capacity of societies. They also conduct all the business of a joint stock bank.

State Co-operative Banks: The state co-operative bank is a federation of central co-operative bank and acts as a watchdog of the co-operative banking structure in the state. Its funds are obtained from share capital, deposits, loans and overdrafts from the Reserve Bank of India. The state co-operative banks lend money to central co-operative banks and primary societies and not directly to farmers.

 Land Development Banks: The land development banks are organised in 3 tiers namely, state, central and primary level and they meet the long term credit requirements of the farmers for developmental purposes. The state land development bank overseas the primary land development banks situated in the districts and tehsils in the state. They are governed both by the state government and Reserve Bank of India. Recently, the supervision of land development banks has been assumed by National Bank for Agriculture and Rural Development (NABARD). The sources of funds for these banks are the debentures subscribed by both central and state government. These banks do not accept deposits from the general public. Scheduled Urban Co operative Banks Non-scheduled Urban Co operative Banks State Co-operative Banks

The Andaman and Nicobar State Cooperative Bank Ltd. P.B.No.289 8, Maulana Azad Road Port Blair - 744 101.

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The Andhra Pradesh State Cooperative Bank Ltd. P.B.No.142 , 4-1-441, Troop Bazar Hyderabad G.P.O. Hyderabad - 500 001. 4. The Assam Cooperative Apex Bank Ltd. P.B.No.151, Apex Bank Building Hem Barua Path Pan Bazar Guwahati - 781 001. The Chandigarh State Co-operative Bank Ltd. S.C.O.1088 - 89

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The Arunachal Pradesh State co-operative Apex Bank Ltd. P.O.& T. Naharlagun "D" Sector District - Subansiri Naharlagun - 791 110. The Bihar State Cooperative Bank Ltd. Ashok Rajpath Patna - 800 004.

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Sector - 22 - B Chandigarh - 160 022. 7. The Delhi State Cooperative Bank Ltd. 31, Netaji Subhash Marg Daryaganj New Delhi - 110 002. The Gujarat State Cooperative Bank Ltd. Sahakar Bhavan Tilak Road Ahmedabad - 380 001. 8. The Goa State Cooperative Bank Ltd. Dayanand Smriti Building Swami Vivekanand Road, P.B.No.183 Panaji - 403 001. The Haryana State Co-opertive Apex Bank Ltd. Bank Square Sector 17-B P.B.No.7 Chandigarh - 160 017. The Jammu and Kashmir State Cooperative Bank Ltd. Bhagat Barzulla Chowk Bagat New Airport Road Srinagar - 190 005. The Kerala State Co-operative Bank Ltd. "COBANK Towers" P.O.Vikas Bhavan Palayam P.B.No.6514 Thiruvananthapuram - 695 033. The Maharashtra State Co-operative Bank Ltd. Sir Vithaldas Thakersey memorial Building 9, Maharashtra Chamber of

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The Himachal Pradesh State Co-operative Bank Ltd. No.1, Bank Building, 2nd Floor Shimla - 171 001.

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The Karnataka State Co-operative Apex Bank Ltd. No.1, Pampamahakavi Road Chamrajpeth P.B.No.1854 Bangalore - 560 018. The Madhya Pradesh Rajya Sahakari Bank Maryadit Multistoryed Building T.T.Nagar New Market P.B.No.315 Bhopal - 462 003.

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Commerce Lane P.B.No.472 Fort Mumbai - 400 023. 17. The Manipur State Cooperative Bank Ltd. Assembly road Imphal - 795 001. 18. The Meghalaya Cooperative Apex Bank Ltd. Apex Bank Building M.G.Road P.O.Shillong Shillong - 793 001. The Nagaland State Co-operative Bank Ltd. P.B.No.151 Head OfficeDimapur Dimapur - 797 112. The Pondichery State Co-opertive Bank Ltd. P.B.No.34, No.288 Amudhasurabhi Building First Floor M.G.Road Pondicherry - 605 001. The Rajasthan State Co-operative Bank Ltd. Nehru Bazar P.B.No.86 G.P.O., M.I. Road Jaipur - 302 003. The Tamil Nadu State Apex Cooperative Bank Ltd. 233, N.S.C. Bose Road P.B.No.226 Chennai - 600 001.

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The Mizoram Cooperative Apex Bank Ltd. Head Office, 2nd Floor K.t. Khuma Building Bungkawn P.B.No.138 Aizwal - 796 001. The Orissa State Cooperative Bank Ltd. Pandit Jawaharlal Nehru Marg Bhubaneswar - 751 001.

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The Punjab State Cooperative Bank Ltd. S.C.O.No.175-187 Sector -34-A Chandigarh - 160 022.

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The Sikkim State Cooperative Bank Ltd. Sonam T Shering Marg Gangtok - 737 101.

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The Tripura State Cooperative Bank Ltd. P.B.No.27 Post Office Chowmohani Amulya Market 2nd Floor Mantribari Road, P.O. Agartala Agartala - 799 001. The West Bengal State Co-operative Bank Ltd. 24-A, Waterloo Street Kolkata - 700 069.

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The Uttar Pradesh Co-operative Bank Ltd. 2, M.G.Road P.B.No.174 Lucknow - 226 001.

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The Chhattisgarh RajyaSahakari Bank Maryadit Indira Gandhi Commercial Compound P.B.No.40 P.O.Pandari, H.O. Raipur Raipur - 492 001.

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The Uttarakhand State Co-operative Bank Ltd. Head Office Kaladhungi Road Near Mukhani Chauraha Haldwani District Nainital Uttarakhand 263139

District Co-operative Banks

List of Co Operative Banks

Benchmark Prime Lending Rates (New): Co-operative Banks
Sr.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Name of the Bank Abhyudaya Co-op. Bank Ltd. Amanath Co-op. Bank Ltd. Apna Sahakari Bank Ltd. Bassein Catholic Co-op. Bank Ltd. Bombay Mercantile Co-op. Bank CITIZENCREDIT Co-op. Bank Ltd. Dombivli Nagari Sahakari Bank Jalgaon Janata Sahakari Bank Ltd. Janakalyan Sahakari Bank Ltd. Janata Sahakari Bank Ltd. Mahesh Sahakari Bank Ltd., Nagpur Nagarik Sahakari Bank Ltd. New India Co-op. Bank Ltd. Nutan Nagarik Sahakari Bank Ltd. Punjab & Maharashtra Co-op. Bank Ltd. Rajkot Nagarik Sahakari Bank Ltd. The A.P. Mahesh Co-op. Urban Bank Ltd. The Bharat Co-op. Bank (Mumbai) Ltd. The Chitanavispura Sahakari Bank Ltd The Cosmos Co-op. Bank Ltd. The Deccan Merchants Co-op. Bank Ltd. The Greater Bombay Co-op. Bank The Jalgaon People`s Co-op. Bank Ltd The Kalupur Commercial Co-op. Bank Limited The Kapol Co-op. Bank Ltd. The Karad Urban Co-op. Bank Ltd The Mahanagar Co-op. Bank Ltd The Municipal Co-op. Bank Ltd. The North Kanara GSB Co-op. Bank Ltd. The Saraswat Co-op. Bank Ltd. The Shamrao Vithal Co-op. Bank The Surat People`s Co-op. Bank The Urban Co-op. Bank Ltd. The Zoroastrian Co-operative Bank Limited TJSB Sahakari Bank Ltd. As on 13/8 / 2008 10/5 / 2006 16/8 / 2008 1/7 / 2008 30/9 / 2007 9/7 / 2008 1/5 / 2006 1/8 / 2008 1/5 / 2006 25/6 / 2008 1/4 / 2009 31/12 / 2007 5/8 / 2008 1/5 / 2006 1/8 / 2008 1/8 / 2008 31/3 / 2008 31/3 / 2008 1/5 / 2009 1/5 / 2008 4/8 / 2008 1/7 / 2009 1/1 / 2004 1/7 / 2009 1/5 / 2006 1/1 / 2009 29/6 / 2009 31/8 / 2009 20/7 / 2009 15/3 / 2004 21/7 / 2008 1/1 / 2004 1/4 / 2009 31/3 / 2008 1/8 / 2003 BPLR 15.50 11.25 15.00 12.00 12.50 15.00 10.75 14.50 10 15.25 12.00 15.00 14.00 11 17.00 16.00 NIL 11.00 10.50 12.00 14.25 12.75 12.5 12.25 12.5 15.50 11.75 12.00 15.75 12.75 16.00 12.5 12.00 14.00 11.5

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