1.

INDUSTRY OVERVIEW OF CO-OPERATIVE BANK

1.1 DEFINATION: CO-OPERTIVE BANKING

 A Co-operative bank, as its name indicates is an institution
consisting of a number of individuals who join together to pool
their surplus savings for the purpose of eliminating the profits of
the bankers or money lenders with a view to distributing the
same amongst the depositors and borrowers.

 The Co-operative Banks Act, of 2007 (the Act) defines a co-

operative bank as a co-operative registered as a co-operative
bank in terms of the Act whose members.

1. Are of similar occupation or profession or who are

employed by a common employer or who are employed
within the same business district; or

2. Have common membership in an association or

organisation, including a business, religious, social, co-
operative, labour or educational group; or

3. Have common membership in an association or

organisation, including a business, religious, social, co-
operative, labour or educational group; or

4. Reside within the same defined community or

geographical area.
 2. INTRODUCTION -Co-OPERATIVE BANK

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. This banks provide financial assistance to locals of the
community and protects them against the debt tap of the money
lenders and Traditional savakars. They are the main reason for
breaking the monopoly of money lenders. Co operative banks in India
came into existence with the enactment of the Agricultural Credit Co-
operative Societies Act in 1904. Co-operative bank form an integral
part of ban king system in India. Under the act of 1904, a number of
co-operative credit societies were started. Owing to the increasing
demand of co-operative credit, anew act was passed in 1912, which
was provided for establishment of co-operative central banks by union
of primary credit societies and individuals.

Importance given to co-operative banks in India is very much

high compared to other parts of the world. Their role in rural
financing continues to be important even today, 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. Co-operative bank regulated by Reserve Bank of
India, NABARD & Apex bank. They are governed by the Banking
Regulations Act 1949 and Banking Laws (Co-operative Societies)
Act, 1965.
They provide financial assistance to Rural as well as Urban areas.

 Rural -Farming, personal finance, cattle's, housing.

 Urban-personal, housing, Business purpose, Self-employment.

Co-operative banks provides various services which include

loans, deposits, lockers, Overdraft, ATM, etc. The distinctive features
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 client. The total deposits and landings of Co-
operative banks are much more than the Old Private Sector
Banks and the New Private Sector Banks.
 3. IMPORTANCE OF CO-OPERATIVE BANKS

 Co-operative bank is a financial entity belonging to its members

who are its customers as well. providing them with a wide range
of banking and financial services.
 Main motive is not to generate profit but to provide the best
possible products and services to its members and also non-
members.
 Co-operative bank reduces banking exclusion and foster
economic growth of country, by increasing banking access in
areas or markets where other areas are less present-SME's,
farmers in rural area, middle or low income households in urban
areas.
 Co-operative banks are deeply rooted inside local areas and
communities. They are involved in local development and
contribute to the sustainable development of their communities.
 Criteria for getting loan from Co-operative banks are less
stringent than for a loan from a Commercial bank.
 The exponential growth of co-operative banks in India is
attributed mainly to their much better local reach, personal
interaction with customers and their ability to catch the nerve of
the local clientele.
 4. DIFFERENCE BETWEEN COMMERCIAL
BANK & CO-OPERATIVE BANKS

 Commercial banks are required to be registered under Banking

Regulation Act, 1949.
 Whereas co-operative banks are required to be registered under
the Co- operatives societies Act of 1904.
 Commercial banks are subject to the control of the Reserve
Bank of India.
 Co-operative banks are subject to the nules laid down by the
Registrar of co-operative Societies.
 Commercial banks in India are on a larger scale. They have
branch system hence they have branches all over country.
 Co-operative banks follow only unit- bank system and are
relatively on a much smaller scale. The coverage of co-operative
banks is not countrywide.
 Commercial banks in India are of two types i.e. Private and
Public sector banks.
 Co-operative banks are private sector banks.
 .Co-operative banks have lesser scope in offering a variety of
banking services than commercial banks.
 Co-operative banks offer a higher rate of interest to their
depositors than commercial banks.
 Commercial banks operates to earn profit. Whereas co-operative
banks operate mainly to service its members and the society.
 Massive funds are available for disposal with the commercial
banks, whereas limited funds are avail able with the co-
operative banks.