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 What is Bank?
ͻ A Bank is financial institution whose primary activity
is to act as payment agent for customers, and to
borrow land.

ͻ Now banking is a service industry. In India

they are a major part of the financial sector
and serve as life blood for the whole industry.
 6tructure of Banking in India
R.B.I.

Scheduled Non Scheduled

Bank Banks

Scheduled Scheduled
Commercial Cooperative
Banks Banks

Scheduled Scheduled
Public Private Foreign Regional Urban State
Sector Sector Banks Rural Cooperative Cooperative
Banks Banks Banks Banks Banks
 WHAT I6 RURAL BANKING ?

v It is a form of banking service that provide

solution to the financial needs of the consumers
in Rural areas
 Rural Banking
ͻ Today Indian Economy is considered as one of the
most rapidly expanded one among the developing
countries of the world.
ͻ Agriculture in India is one of the most important
sectors of its economy. About 43 % of Indian͛s
geographical area is used for agricultural activity.
ͻ Bank located in rural areas come up with diverse
programs to bring changes in the life of rural people
by engaging them in self employment schemes.
ͻ There a large disparity in banking penetration within
urban and rural India. While urban India seems to be
over-banked with more than 100% penetration rural
India lags far behind with a 19% penetration.
 ßbjectives ßf Banking 6ervices In
Rural Areas
ͻ Poverty Alleviation ßbjectives:
The objectives is to uplift the mass of population
residing in the rural areas who are currently below
the poverty line by extending credit to the smallest-
scale economic activity.
ͻ Financial Intermediation ßbjectives:
The approach involves increasing the accessibility
of banking services to the poor in a commercially
sustainable manner.
 Business of a rural bank
ͻ The granting of loans and advances, particularly to
small and marginal farmers and agricultural laborers,
whether individual or in groups and to co-operatives
societies

ͻ The granting of loans and advances, particularly to

artisans, small entrepreneurs and persons of small
means
 Initiatives for rural banking
development
ͻ Haryana 6tate Cooperative Apex Bank Limited
ͻ NABARD
ͻ United Bank of India
ͻ 6yndicate Bank
ͻ Co-operative bank
Rural Banking After Independence
ͻ Pre-Nationalization period
: The presence of banking sector was very
limited.
: In 1951 informal credit accounted 70% of rural
lending and less than 1% of rural household
debt came from commercial bank.
ͻ Nationalization of banks
: 14 Largest Indian commercial banks were
nationalized in 1969.
: The central aim was to provide the banking
services to all sections of society.
 Future of Rural Banking in India
ͻ ßver the past 20 years, rural banking often remained
in the shadows as banks focused on opportunities in
urban markets and the corporate sector.
ͻ There has been tremendous progress in quantitative
terms but quality has suffered, progress has been
slow and halting and significant regional disparities
persist.
ͻ The rural poor still have very little access to formal
finance.
ͻ India has more potentiality of banking in rural areas,
where the new banks can come and reap the
advantages of potentiality and can grow by
developing the rural sector.
 MEANING ßF Cß ßPERATIVE BANK
ͻA 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.

ͻCo-operative banks are often created by persons

belonging to the same local or professional community or
sharing a common interest.

ͻCo-operative banks generally provide their members with

a wide range of banking and financial services (loans,
deposits, banking accounts͙).
MEANING ßF Cß ßPERATIVE BANK
vIn India co-operative banks are regulated with the
RBI and governed by Banking Regulations Act 1949
and Co-operative 6ocieties Act, 1965.
 ßRIGIN ßF Cß-ßPERATIVE BANKING:

ͻ Co-operativebanks in India came into existence with the

enactment of the Agricultural Credit Co-operative 6ocieties Act in
1904

ͻThe philosophy of equality, equity and self help gave way to the
thoughts of self responsibility and self administration which
resulted in giving birth of co-operative.

ͻßwing 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 a union of primary credit societies and
individuals.
 RßLE ßF Cß-ßPERATIVE BANKING IN
INDIA
ͻ The Co-operative banks in rural areas mainly finance agricultural
based activities like:

ͻ Farming, Cattle, Milk, Hatchery and Personal finance

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

ͻ 6elf Employment , Industries, 6mall 6cale Units, Home Finance

and Consumer Finance
The chief functions of Co-operative
banks are:
ͻ To attract deposit from non-agriculturist,

ͻ To use excess funds of some societies temporarily to make up

for shortage in another,

ͻ To supervise and guide affiliated societies.

 The basic principles on which a Co-
operative bank works are:
ͻ A co-operative character of activities and trait of mutual aid of credit
granted.

ͻ Catering for collective organizations and their members.

ͻ Restriction on the number of individual votes.

ͻ As a result, during 2007-08, the Primary Cooperative Agriculture and Rural

Development Banks have again started lending for the Non-Farm 6ector
including Jewel Loans.

ͻ Aiming at high rates on deposits and low rates on lending.

ͻ Limitation of dividends out of profits and bonus to depositors and

borrowers or grants to cultural or co-operative endeavour.
Common features for their customer
benefit
ͻ Customer-owned entities: In a co-operative bank,
the needs of the customers meet the needs of the
owners, as co-operative bank members are both.

ͻ Democratic member control: Co-operative banks

follow the principle of ͞one person, one vote͟.

ͻ Profit allocation: Profit is usually allocated to

members which is related to the number of shares
subscribed by each member.
 Financial intermediaries
ͻ The sources of their funds (resources) are:
(a) Central and state government,
(b) The Reserve Bank of India and NABARD,
(c) ßther co-operative institutions,
(d) ßwnership funds and,
(e) Deposits or debenture issues.

Co-operative banks (CßBs), in short, have played a

pivotal role in the development of short-term and
long-term rural credit structure in India over the
years. The co-operative credit effort is said to be the
first ever attempt at micro-credit dispensation in
India.
 Future of Co- operative banking
v With limited area of operation for so many decades
together, Urban Co-operative banks cold not expand
their business in other area in general. At this
juncture, it should have governmental support and
the government should liberalize this area of
operation, so that they could increase their business
at their will.
v All Co-operative banks should come in one umbrella
i.e. CßRE BANKING.
v Co-operative banks, with their newly formed
emphasis on prudential norms, need a high degree
of professionalism in management.
CßNCLU6IßN FßR RURAL BANK
v There are 185 million bankable adults in rural India who are
unbanked because of access and usage issues. This presents a
significant opportunity for commercial banks.

v Furthermore, banks should tailor their product and service mix

to meet rural needs, and adapt their delivery models to ensure
commercial viability of their rural banking operations.
 CßNCLU6IßN FßR Cß ʹßPERATIVE
BANK
v Now, It is very much clear that co-operative banks have very
much importance in national development. Without the help
of co-operative banks, millions of people in India would be
lacking the much needed financial support.

v Co-operative banks take active part in local communities and

local development with a stronger commitment and social
responsibilities. These banks are best vehicles for taking
banking to doorsteps of common men, unbanked people in
urban and rural areas. Their presence in the social, economic
and democratic structure of the country is essential to bring
about harmonious development and that perhaps is the best
justification for nurturing them and strengthening their base.
These banks are sure to win in the race because they are from
the people, by the people and of the people.
 BIBLIßGRAPHY
ͻBanking Theory and Practice
ʹ by K.C. Shekhar and Lekshmy Shekhar

ͻCo-operative Banks in India ʹ Functioning and Reforms

ʹ by Amit Bhasak

2 BSIT S
ͻen.wikipedia.org/wiki/Cooperative_banking.

ͻwww.banknetindia.com/banking/cintro.htm.

ͻ http://www.scribd.com/doc/36888125/Co-operative-Banking

ͻ Reserve Bank of India, www.rbi.org.in

Thank You