CO-OPERATIVE BANKS V/S COMMERICAL BANKS OBJECTIVES AND FUNCTIONS

Submitted by: Group-2 Abhishek Tiwari Anish Pandey Ankit Surana Anubhav Srivastava

Co-Operative Bank
Co-operative Banks are organized and managed on the principal of cooperation, self-help, and mutual help. Function with rule of one member, one vote and no loss, no profit basis. Co-operative Banks , as a principle, do not pursue the goal of profit maximisation.

Dominant Feature of Co-Operative Bank Maximizing profits and the rate of return on capital are not the dominant business objectives of cooperative banks. Cooperative banks are essentially owned by their members & ownership is at the local or regional level. Cooperative banks are often part of a national network with an integrated Structure. Cooperative banks have a close proximity to their members and customers. Rare for a cooperative bank to be listed on a stock exchange although some cooperative banks have subsidiaries which are listed. Ownership stakes in cooperative banks are not tradable in an open market Generally, profits are retained within the bank with only limited distributions being made.

Distinguish Between Commercial Bank and Co-operative Bank Parameters

1. Registration

Commercial Banks
Commercial Banks are required to be registered under Banking Regulation Act, 1949

CoOperative Banks
Co-operative Banks are required to be registered under the Co-operative Societies Act, of the concerned state.

2. Main Objective

Commercial Bank is to accept deposits from public for the purpose of lending to industry and commerce

Co-operative Bank is to accept deposits from the members and the public for the purpose of providing loans to farmers and small businessmen with a motto of service Limited funds are available at the disposal of Co-operative Banks
The area of operations of Cooperative Banks is limited and mostly confined to State. They do not operate at national level nor international level

3. Availability of Funds

Massive funds are available at the disposal of Commercial Banks.

Commercial banks operate over a larger area. Some commercial banks even have branches in foreign countries

4. Area of Operation

Parameters
5. Nationalization

Commercial Banks

CoOperative Banks

At present 20 Commercial In India Co-operative Banks Banks have been nationalized are not nationalized. in India
Co-operative Banks do not provide merchant banking services.

6. Merchant Banking Services Commercial Banks provide merchant banking services such as advising the companies regarding the public issue of shares. 7. Mutual Funds Commercial Banks in India such as Canara Bank, Bank of India, State Bank of India, do operate mutual funds. Commercial banks operates on the commercial principles. They operate to earn a profit. The Commercial Banks provide a lesser rate of interest as compared to cooperative banks.

At present co-operative banks in India do not operate mutual funds.

8. Basis of operation

The basis of operations is cooperative lines, i.e. service to its members and the society. The Co-operative Banks provide a little higher rate of interest on deposits as compared to commercial banks

9. Rate of Interest