The co-operative banks in India have a history of nearly a hundred years. The co-operative banks square measure a crucial constituent of the Indian economic system, judgment by their role appointed to them, the expectations they square measure supposed to fulfill, their range, and the range of offices they operate.
The co-operative movement was originated in the west, however the necessary that such bank have assumed in India is seldom paralleled anyplace else in the world.
Their role in rural finance continues to be necessary event these days, and their business in urban areas additionally has enhanced phenomenally in recent years primarily due to the sharp increase in the quantity of primary co-operative banks.
Co-operative banks in India square measure registered beneath the Co-operative Societies Act. The co-operative banks square measure additionally regulated by the Reserve Bank of India (RBI) and ruled by Banking laws Act 1949 and Banking Laws (Co-operative Societies) Act, 1955.
- A co-operative bank is a money entity that belongs to its members, WHO square measure at the same time the owners and the customers of their bank. Co-operative banks square measure usually created by persons happiness to the same native or skilled community of sharing a common Co-operative banks usually give their members with a wide vary of banking and financial services (loans, deposits, banking accounts, etc.).
- Co-operative banks dissent from stockholders bank by their organization, their goals, their values and their In most countries, they are supervised and controlled by banking authorities and have to respect prudential banking laws, that place them at A level taking part in field with Stock holders banks.
- Depending on countries, this management and superintendence
- Can be enforced directly by state entities or delegated to a co-operative federation or central body. All the co-operative banks share common features as delineate below
In a co- operative bank, the requirements of the customers meet the requirements of householders, as co-operative bank members area unit each i.e. customer and owner.
Democratic Member Control:
Co – operative banks area unit in hand and controlled by the members, World Health Organization democratically elect the board of the directors. Members typically have equal vote rights, consistent with the co-operative principle of “one person, one vote”.
In a co-operative bank, a important half of the yearly profit, advantages or surplus is typically allotted to represent reserves. A half of this profit will additionally be distributed to the co-operative members, with legal and statutory limitations in most cases.
Profit is typically allotted to members either through patronage dividend, that is said to the utilization of co-operative merchandise and services by every member, or through associate degree interest or a dividend, that is connected to the variety of shares signed by every member.
District Co-operative Banks (DCBs) occupy the middle level position in the three tier co-operative credit structure of the country. In the beginning of the formation of PACSs, they could not function effectively without gaining financial support from an outside agency. Over and above this, they were in need of technical guidance and administrative support.
At the same time, there were some societies which have gained strength and posses surplus funds as well as talents. As a precondition to get mutual help it became necessary that all these primary societies form a federation for ensuring rational use of their funds and provide a common place to meet for exchange of ideas and co-operative experience.
The formation of DCBs was thus a felt need for mutual help. The Co-operative Societies Act of 1912 permitted the registration of DCBs. Even before the enactment of this Act, some DCBs were established to cater to the needs of primary societies. In 1906, forerunner of the first DCB was established as a primary society in Uttar Pradesh. At Ajmer in Rajasthan the first DCB was established in 1910. But the first full fledged DCB as per the provisions of the Act of 1912 was started in Jabalpur District of the Central Province.
State Co-operative Banks in India
The State Co-operative Banks (SCBs) or the apex banks occupy a crucial position in the three tier co-operative credit structure in India. These apex banks or State Co-operative Banks are formed by federating DCBs in each state.
The apex banks assume a key-position in the co-operative credit structure because the financial assistance from RBI and the National Bank for Agriculture and Rural Development are invariably routed through them. Table 3.5 presents the key statistics relating to SCBs in India for the period 1975-76 to 1990-91.