Cooperative Credit Institutions

1. COOPERATIVE CREDIT INSTITUTIONS Voluntary association of members for self help, catering to the financial needs on a mutual basis.

2. A financial entity which belongs to its members. Members are both customers and owners at the same time. Created by persons belonging to same local or professional community or sharing a common interest. They provide their members with a wide range of banking and financial services (loans, deposits, banking accounts etc). Carried on no profit no loss basis FEATURES

3. In India they are regulated with the RBI and governed by Banking Regulations Act 1949 and cooperative societies Act 1965.

4. Lower administrative costs on account of voluntary services rendered by their members. They fill a strong feeling of responsibility among their members for punctual payment of interest and repayment of loans. They promote savings among their members and mobilize their small savings for productive purposes. Procedure of deposits and withdrawal is far less complicated than a commercial bank, since personal identification and such other problems don’t exist. Provide loans to their members at lower rates. Make their members financially more secure Suitable to help for small means MERITS

5. STRUCTURE

6. COOPERATIVE CREDIT INSTITUTIONS URBAN COOPERATIVE BANKS RURAL COOPERATIVE BANKS

7. URBAN COOPERATIVE BANKS SCHEDULED NON SCHEDULED MULTI STATE SINGLE STATE SINGLE STATE MULTI STATE

8. RURAL COOPERATIVE CREDIT INSTITUTIONS SHORT TERM LONG TERM STATE COOPERATIVE BANKS DISTRICT CENTRAL COOPERATIVE BANKS PRIMARY AGRICULTURAL CREDIT SOCIETIES SCARDBs PCARDBs

9. RURAL COOPERATIVE CREDIT INSTITUTIONS

10. SHORT TERM COOPERATIVE CREDIT STRUCTURE (STCCS)

11. They are the local or base level. In rural areas there are PACs which cater to the short and medium term credit needs of the farmers. Their members have unlimited liabilities. Members contribute in share capital. Members elect president and other members of the managing committee. They raise funds by share capital, membership fees, deposits of members and non-members and loans from the district central cooperative banks and the government. PRIMARY AGRICULTURAL CREDIT SOCIETIES

12. They are federations/group of primary credit societies belonging to a specific district. They manage their funds from share capital, deposits, loans from State Cooperative Banks and other commercial banks. DISTRICT CENTRAL COOPERATIVE BANKS

13. Formed by federating all district central cooperative banks in a particular state. It is the apex bank of cooperative sector in India. It raises its funds by way of share capital, deposits from funds, surplus funds of the affiliated CCBs reserve funds, loans from the SBI, other commercial banks, and inter-bank borrowings. They are supported by the RBI. Between 50-90% of the working capital of the SCBs are contributed by the RBI. STATE COOPERATIVE BANKS

14. LONG TERM COOPERATIVE CREDIT STRUCTURE (LTCCS)

15. URBAN COOPERATIVE BANKS SCHEDULED NON SCHEDULED MULTI STATE SINGLE STATE SINGLE STATE MULTI STATE

16. Cooperative credit societies established in urban areas. Maharashtra-only those urban credit societies can be called as ‘banks’ which conduct banking business in accordance with Sec.277F of the Indian Companies Act 1913 and should have paid up share capital exceeding Rs. 20,000. URBAN COOPERATIVE BANKS

17. They meet needs of specific types or group of members. Also called PRIMARY COOPERATIVE BANKS (PCBs) by the RBI. “ small sized cooperatively organized banking units which operate in metropolitan, urban and semi-urban centres to cater mainly the needs of small borrowers, viz., owners of small scale industrial units, retail traders, professionals and salaried classes ”. The Urban Banks Dept. established in the RBI in 1984, monitors and regulates the growth of PCBs. Objective:- promoting savings and self help among the middle class population and providing credit facilities to the people with small means in the urban/semi-urban centres.

18. Regulated and supervised by:- In case of single-state cooperative banks:- State Registrars of Cooperative Societies (RCS) In case of multi-state cooperative banks:- the RBI

19. Following the recommendation of the National Federation of Urban Cooperative Banks, the RBI decided to include in the 2 nd Schedule of the RBI Act, 1934, all licensed urban cooperative banks whose total deposit are Rs. 50 crores and above and whose methods of operations and working are satisfactory. SCHEDULED COOPERATIVE BANKS

20. From Sep. 1, 1988, the following 11 urban cooperative banks have been included in the 2 nd Schedule:- The Abhyudaya Cooperative Bank Ltd. The Bombay Mercantile Cooperative Bank Ltd. The Development Cooperative Bank Ltd. Janata Sahakari Bank Ltd. Kalupur Commercial Cooperative Bank Ltd. Rajkot Nagrik Sahakari Bank Ltd. Rupee Cooperative Bank Ltd. Sangli Urban Cooperative Bank Ltd. Saraswat Cooperative Bank Shamrao Vithal Cooperative Bank Ltd. The Surat People’s Cooperative Bank Ltd.

21. The banks which are not included in the 2 nd schedule of RBI act 1934. These also have to maintain statutory cash reserve ratio but not with RBI. Their banking activities are limited. For e.g.:- they cannot deal in foreign exchange. The share of these banks are almost nil. NON-SCHEDULED COOPERATIVE BANKS

22. Following are few non-scheduled banks:- Akhand Cooperative Bank Ltd. Apani Sahkari Bank Ltd. Baroda Traders Cooperative Bank Ltd. Citizen Cooperative Bank Ltd. Financial Cooperative Bank Ltd.

23. DIFFERENCE BETWEEN COOPERATIVE & COMMERCIAL BANKS

24. COMMERCIAL BANKS COOPERATIVE BANKS Joint stock company. Governed by Banking Regulation Act. Subject to control of the RBI directly More Scope Larger scale Public and private banks Borrowers don’t have any voting rights as such Cooperative organizations. Governed by Cooperative Societies Act 1956 Subject to rules laid down by Registrar of Cooperative Societies Lesser scope Smaller scale Private sector banks Borrowers have some influence on the lending policy of the banks