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Cooperative Banks in India Final
Cooperative Banks in India Final
Submitted by
December 2021
MAHARASTRA NATIONAL LAW UNIVERSITY , NAGPUR
List of statute:
i
1. The Cooperative Societies Act 1912
List of Cases:
List of abbreviation:
Content
ii
Subject page no.
1. Introduction.................................................................................
2. Objective of Study......................................................................
3. Research Hypotheses.................................................................
4. Research Question.....................................................................
5. Research Methodology..............................................................
6. Scope and Limitation..................................................................
7. Chapterization ............................................................................
8. Conclusion and suggestions........................................................
Bibliography
I. Printed Source
1. Books
2. Articles
II. Electronic Source
1. Webliography
iii
Introduction:
1
m.rbi.org.in
1
non scheduled USB further divided into multi state cooperative and single
state cooperative banks
Rural Cooperative
institutions further divided into long term and short term Cooperative
institutions in which State cooperation, District Central cooperation and
Primary cooperation are the types of short term cooperative credit
institutions.
Cooperative banks have their
own objectives and mechanisms and are different from commercial banks on
ground of governance, objective and values, Interest, Organisation etc.
Cooperative banks provide funds for the agriculture, livestock, milk, and
nursery and especially to small scale industries. To provide micro and rural
finance, housing finance assistance, remove dominance of money lenders,
credit to weaker and developing sections and to provide basic banking service
to customers are some of the objective of cooperative banks in India.In
present cooperative banks are facing great financial loss because of
mismanagement and lack of funding many of them are in condition of
winding up. In this research researcher is going to discuss challenges of
cooperative institutions and tried to suggest way by analysing present
condition.
Objectives of research:
2
8. To find way forward to improve condition of cooperative banks.
Hypotheses:
Research Question:
Methodology:
This research is mainly doctrinal form of research but researcher is also tried
to collect imperial data to give justice to title. Basically the researcher is
relied on primary and secondary data, different article, news report and
opinion of scholars. Data is collected from many authentic and governmental
sites.
The Researcher is also relied on provisions in Banking Regulation Act,
Cooperative Societies Act and the recommendation of different committees
set up by RBI to deal with present condition of cooperative banking
institutions.
3
The Researcher had studied RBI guidelines regarding reformation of
cooperative banks and also relied on figures and numbers mention in various
reports to analyse situation of cooperative baking institutions.
TheResearcher is also tried to find out why top 10 cooperative banks are top
10 in ranking by following official sites of bank and award and recognition to
the same.
Basically researcher is
trying to find out functioning and management of efficient cooperative banks
and compare that functions and management with banks which are in crisis to
find out way forward for cooperative banking institution to sustain in market.
Scope:
Limitations:
4
Only relevant guidelines of RBI amendments and report of different
committees are taken into the consideration.
Introduction:
5
imposing fresh regulatory majors or extending exiting ones and cancelled 6
licenses of cooperative banks India3. Report shows that there are 75
increasing number of cases over non compliance as compared to just 23 in
2020 and 7 in 20194.
Major financial irregularities,
failure of internal control system wrongdoing and under-reporting of its
exposure are some of the reason behind collapsing cooperative banks in
India. Report shows that many cooperative banks are collapsed because of
many issues.
PMC bank has been facing
regulatory action and investigation over alleged irregularity in certain loan
account. Central bank the amount a customer could withdraw from their
account. PMC bank allegedly created fictitious account of companies which
borrowed small sum of money and created fake report to hide from regulatory
supervision. It is basically case of fraud in cooperative banks.
Corporate Governance:
3
https://economictimes.indiatimes.com/industry/banking/finance/banking/rbi-cancels-united-co-operative-
banks-licence/articleshow/82607367.cm
4
The Hindu speech by nirmala sitaraman in parliament
6
undefinedlength of service of board members are some of the challenges in
corporate governance in cooperative banks in India.
Cooperative banks has very small capital base it can start business with a
base capital of 25 lakhs,which means difficult for cooperative banks to
account a portion of such capital as their working capital and raising working
capital has been major hurdle for many cooperative banks.
RBI supervision:
Administrative rate of structure for a long time: All administrative and
financial power is vested with board/management. Promoting member
proximity insuring regular, frequent and meaningful interaction with the
members are some of the challenges before cooperative bans in India.
5
http://economic times. India times.com why/cooperative/-banks/is-in/crisis/article/446820
7
Trust deficit:
At account of widening trust deficit and competition from strong industry
rivals these cooperative banks entities are struggling to survive. They have
seen sharp erosion in business in recent years. The decline in loan growth and
deposit growth indicates trust deficit by the depositors on functions of
cooperative banks in India.
6
Sec 45 of banking and regulation Act 2013
8
The reform to improve condition of cooperative bank is more concern on
more interference of RBI and fulfilling professionalism in ability to run
cooperative banks, detailed review of capital management has to be done
more accountability and transference should be inculcated in management
To find way and suggesting
reform we have to compare cooperative banks which are suffering from
financial crisis now with top level cooperative banks
Technological support and well train staff is one of the key feature of
efficient cooperative banks in India.
9
different region of country which perform different functions but in recent
time Cooperative banking system is facing some crisis many banks are in
position of winding up. Cooperative banks should have to deal with many
challenges; merger is one of the best options to improve condition of many
cooperative banks in India. Supervision of RBI is mandatory to improve
condition of cooperative banking system. Use of modern technology efficient
staff and improved corporate governance can help to resolve challenges in
front of cooperative banks in India.
10
Printed Sources:
1. Akansha Pratik Sanker ‘Cooperative credit institutions and Rural credit
in India under Neolibralism’ vol.47 No 11/12 pp-3762
2. “Urban Cooperative Banks: Issues and prospects” vol.48 2003,(pp-1505-
1513)
3. K.S.Anandaram and MeghaDubhashi, “Role of cooperative in social
development” Vol.35 pp-108-133
Internet Sources:
https://www.inspirajournals.com/uploads/Issues/1260077817.pdfhttps://w
ww.ijeter.everscience.org/Manuscripts/Volume-4/Issue-4/Vol-4- issue-4-
M-16.pdf
https://www.moneycontrol.com/news/business/indias-big-co-operative-
banks-facing-a-trust-deficit-struggle-to-survive-6307271.html
https://www.mondaq.com/india/financial-services/966676/co-operative-
banks-in-india-heading-towards-reform