 DEFINITION

 HISTORY

 INTRODUCTION

 FEATURES

 FUNCTIONS

 CLASSIFICATION

 RECENT DEVELOPMENTS
A co-operative bank is a financial entity which
belongs to its members, who are at the same
time the owners and the customers of their
bank. Co-operative banks are often created by
persons belonging to the same local or
professional community or sharing a common
interest. Co-operative banks generally provide
their members with a wide range of banking
and financial services (loans, deposits, banking
accounts…). In India co-operative banks are
regulated with the RBI and governed by
Banking Regulations Act 1949 and Co-
operative Societies Act, 1965.
The Bank was formed in 1872 in the city
Manchester in UK. The Co-operative banks in
INDIA have a history of almost 100 years. The Co-
operative banks are an important constituent of
the Indian Financial System. Co operative Banks
in India are registered under the Co-operative
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. These banks
were conceived as substitutes for money
lenders.
Co-operative bank performs all the main banking
functions of deposit mobilisation, supply of credit
and provision of remittance facilities.

Co-operative Banks belong to the money market

as well as to the capital market.

Co-operative Banks provide limited banking

products and are functionally specialists in
agriculture related products. However, co-operative
banks now provide housing loans also.

UCBs provide working capital loans and term loan

as well.
• Customer-owned entities: In a co-operative bank,
the needs of the customers meet the needs of the
owners, as co-operative bank members are both.

• Democratic member control: Co-operative

banks follow the principle of “one person, one vote”.

• Profit allocation: Profit is usually allocated to

members which is related to the number of shares
subscribed by each member.
Co-operative Banks are organised and managed on the
principal of co-operation, self-help, and mutual help. They
work on the basis of “no profit no loss”. Profit
maximization is not their goal

Co-operative bank do banking business mainly in the

agriculture and rural sector. However, UCBs, SCBs, and
CCBs operate in semi urban, urban, and metropolitan
areas also.

The State Co-operative Banks (SCBs), Central Co-

operative Banks (CCBs) and Urban Co-operative Banks
(UCBs) can normally extend housing loans upto Rs 1
lakh to an individual. The scheduled UCBs, however,
can lend upto Rs 3 lakh for housing purposes. The UCBs
can provide advances against shares and debentures
Finance Function:

1. Cooperative banks in India finance rural areas

under:
Farming
Cattle
Milk
Personal finance

 2. Cooperative banks in India finance urban areas

under:
Self-employment
Industries
Small scale units
Home finance
Consumer finance
Personal finance
Some co-operative bank are scheduled banks,
while others are non-scheduled banks. For
instance, SCBs and some UCBs are scheduled
banks but other co-operative bank are non-
scheduled banks. At present, 28 SCBs and 11
UCBs with Demand and Time Liabilities over
Rs 50 crore. Co-operative Banks are subject to
CRR and liquidity requirements. However, their
requirements are less than commercial banks.
Sr.N Category of Minimum SLR holding in
o. bank Government and other approved
securities as percentage of Net
1. Scheduled Demand
25% and Time Liabilities
banks (NDTL)
2. Non-
Scheduled
banks
a) with 15%
NDTL of
Rs.25 crore
& above  10%
b) with
NDTL of less
Over the years, primary (urban) cooperative banks
have registered a significant growth in number,
size and volume of business handled. As on 31st
March, 2003 there were 2,104 UCBs of which 56
were scheduled banks. About 79 percent of these
are located in five states, - Andhra Pradesh,
Gujarat, Karnataka, Maharashtra and Tamil Nadu.
According to sources the total deposits & lendings
of Cooperative Banks in India are much more than
Old Private Sector Banks & also the New Private
Sector Banks.