Co-Operative Bank:

  • 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

Customer-Owned Entities:

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”.

Profit Allocation:

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.

ROLE OF CO-OPERATIVE BANKING IN INDIA

Co-operative Banks are much more important in India than anywhere else in the world. The distinctive character of this bank is service at a lower cost and service without exploitation. It has gained its importance by the role assigned to them, the expectations they are supposed to fulfill, their number, and the number of offices they operate.

 

Co-operative banks role in rural financing continues to be important day by day, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary co-operative banks.

 

In rural areas, as far as the agricultural and related activities are concerned, the supply of credit was inadequate, and money lenders would exploit the poor people in rural areas providing them loans at higher rates. So, Co-operative banks mobilize deposits and purvey agricultural and rural credit with a wider outreach and provide institutional credit to the farmers.

 

Co-operative bank have also been an important instrument for various development schemes, particularly subsidy-based programmes for poor. The Co-operative banks in rural areas mainly finance agricultural based activities like:

 

(Banking & Insurance) Co-operative Banking

 

  • Farming
  • Cattle
  • Milk
  • Hatchery
  • Personal finance

 

The Co-operative banks in urban areas finance in activities like:

  • Self-employment
  • Industries
  • Small scale units
  • Home finance
  • Consumer finance
  • Personal finance

 

Some of the forward looking Co-operative banks have developed sufficient core competencies to such an extent that they are able to challenge state and private sector banks.

 

The exponential growth of Co-operative banks is attributed mainly to their much better contacts with the local people, personal interaction with customers, and their ability to catch the nerve of the local clientele.

 

The total deposits and lendings of Co-operative banks are much more than the Old Private Sector Banks and the New Private Sector Banks.