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CO-OPERATIVE BANKS

Definition

Co operative bank is an institution


consisting number of individual who join
together to pool their surplus saving for
the purpose of eliminating the profit of
banks or moneylenders with a view to
distributing the same amongst the
depositors & borrowers .

Introduction

It provide financial assistance to people with small means to


protect from moneylender .

It is engaged in task of production processing marketing


distribution servicing & banking .

They provide their member with a wide range of banking


&financial services.

They mainly focus on micro banking among middle &low


strata of society and operate for the benefit of rural areas.

Features

Organized on the principle of cooperation self help & mutual help.

Function with the rule of one member one vote &no profit no loss.

Provide limited banking product in specially agriculture sector and


housing finance also .

Getting financial &other help from RBI , NABARD and Central & state
government.

They are lender of first resort which provide financial resources in the
form of initial capital through state government .

Role & Importance

They play important role in providing services in rural &urban areas for
providing services at lower cost without exploitation.

It is an important instrument for various development schemes &subsidy


programs for poor people .

Essential growth as a result of better contact with local people , personal


contact with customer.

It is a main source for institutional credit to agriculture sector and they have
extensive network &reach out to people in rural areas

They have traditionally played important role in creating banking habits


among the lower & middle income group.

Structure Of cooperative Banks

Short Term Rural cooperative Banks


State Cooperative Banks

They form the apex of the cooperative credit structure in each state.

They obtain their funds mainly from general public in the form of deposit,
loans &advances from RBI and their own share capital and reserves.

In the absence of district cooperative bank SCBs may give district


financial assistance to the primary credit societies .

It simplifies loan distribution system to enable its member to get loan


very easily.

It brings coordination between RBI Money market &cooperative credit


society

Central Cooperative Bank

These type of banks are located in district .


They provide finance to primary credit society.
They accept deposit from public . They grant

Editing by

HEMANT KUMAR