The Co-operative Bank - A Brief Description
Essential for All Upcoming Bank Exams
History of Co-operative Banking in India:
- From the days of famine and adversity in Europe, the historic roots of cooperative movement around the world face the common people who have not received little or no access to their basic needs in the uncertain times. This idea spread when the continent faces economic disasters, leading to large communities not living in a living phase beyond any economic security. This was the concept of Hermann Schulze (1808-83) and Friedrich Wilhelm Raiffeisen (1818-88) that was attracted to today's co-operative bank around the world. They started making loans for small businesses easily and started promoting the ideas of the poor in the society. It is similar to many microfinance companies which have become very popular in today's developing economy. Although it helped spread the co-operative movement in many parts of Europe, it came from the stimulating Christian movement in the British Isles and gained high recognition with the lower classes of the society and the working class. However, on September 20, the UK and Irish credit unions were inspired by US credit unions, which encouraged them to grow in the Canadian adaptation of the German cooperative banking concept. These movements were supported by the government of the concerned country. This success was achieved in the failure of commercial banks and the need for small business owners and ordinary people who were outside the institutional banking net. Cooperative banks eliminate the defects of essential market and serve poor levels of society.
- Indian Co-operative Bank was born as a result of the current crisis in Indian society.
- The Cooperative Debt Society Act, 1904 leads to the formation of cooperative co-operative societies in both rural and urban areas. This law was foundation on the recommendation of Sir Edward Law (1901) and Sir Frederick Nicholson (1899). Instead, their ideas were based on the pattern of Raiffeisen and Schulze respectively.
- The Co-operative Societies of 1912 recognized the constitution as the non-credit society and the formation of a central co-operative organization.
- In independent India, at the beginning of the plan, cooperative organizations have gained further leverage and roll through continuous government support.
- Due to lack of proper education to the public, the Machlagan Committee in 1915 highlighted the weakness of the co-operative society - thereby lacking proper education of the public. In order to support the movement, he highlighted the importance of central assistance by the government.
- The Agricultural Revenue Commission of 1928 referred to the importance of education of the members / workers for effective implementation of cooperative movement.
- In the year 1945, the Saraiya Committee recommended the establishment of cooperative training colleges in each state and the Center for Advanced Research and Research Cooperative Training Institute.
- In 1953, the Central Committee of Cooperative Training Center formed by the Reserve Bank of India to set up a Regional Training Center.
- Rural Credit Survey Committee, 1954 constituted the first fund and formed the first Rural credit problem and other financial problems of the rural society.
Cooperative movements and banking structures spread quickly and compete with the unexpected needs of Indian and small businesses in rural areas. Because, in the 1950, they found a long way to assist and support the activities of credit, banking, manufacturing, processing, distribution / marketing, housing, warehousing, irrigation, transportation, textiles, dairy, sugar etc. in the household.
Extent of Co-operative Banking:
Indian cooperative structure is one of the largest networks in the world, of which there are more than 200 million members. In rural areas it has contributed about 67% of the intrusion and 46% of gross rural credit. 36% of the total allocation of rural fertilizer and 28% of rural edible value shops.
Structure of Co-operative Banking in India:
The cooperative network structure in India can be divided into two broad area –
- Rural Cooperative Banks
- Urban Cooperative Banks
Rural Co-operative Banks:
Rural Co-operatives are divided into more short-term and long-term structures. Short-term cooperative banks operate in three states. These are –
- District Central Cooperative Banks
- State Cooperative Banks
- Primary Agricultural Credit Societies
Likewise, long-term structures are further divided –
- Primary Cooperative Agriculture and Rural Development Banks (PCARDBS)
- State Cooperative Agriculture and Rural Development Banks (SCARDS)
Rural Banking Co-operatives have a complex monitoring structure because they have dual controls that cause many problems. In order to investigate the control of duality, a forum called Task Force on Cooperative Urban Banks (TAFCUB) has been formed at State Level.
All registration activities and management are conducted by RCS.
All banking functions are controlled by a joint management between the Reserve Bank of India (RBI) and NABARD.
Urban Co-operative Banks:
- Urban co-operatives can be divided into two part, which is Scheduled Levels and Non-scheduled Levels. Most of the banks fall into unregulated and single-state categories.
- Management activities and registration are directed by the Registrar of Co-operative Societies (RCS).
- Banking activities of the Urban Cooperative Bank are monitored by the Reserve Bank of India.
Co-operative Banks-Irritants and Future Trends:
A co-operative bank is an institution which is possess by its own members. They are the ultimate consequences of the same professional or other community effort that is common and shared interests, problems and desires. They provide services like commercial banks such as loans, banking, deposits, and there is a great difference between their values and governance framework. They are usually democratic structures where the members of the board are elected for each vote for each member democratically elected. In India, they are supervised and regulated by the official banking authority and thus have to comply with the existing banking regulations in the country. There can be a difference between basic rules, regulations and valuable nations, but they have some common features –
- Maintain financial inclusion by bringing banking into the doorstep of the lowest division of society.
- The profit is mainly pooled in the form of deposits when some members are distributed.
- Democratic structures
- Community development involved
By Banking Regulation Act, 1949 and the Banking Law Cooperative Societies Act, 1965, these banks are small financial institutions which are methodically by regulations. They work both in urban and rural areas under different structural organizations. Their functions are determined by the level they operate and they are the types of people they meet. They are different from commercial banking organizations.
A state subject of dual control as a 'co-operation' by the state RCS. However, financial regulatory control by the Reserve Bank of India has been facing many problems, because there is ambivalence in the structure of electricity as there is no clear limit.
Their main focus is credit so they reduce the borrower-driven entities and most members do not enjoy nominal and franchise rights.
These were established in the interest of the mainstream commercial banks under the special functions of the co-operative societies operated in different states, which are mainly among the joint stock companies.
Major irritants in the functioning of the Co-operative Banks:
- Small growth of cooperative societies in the map of India. It is said that most of the states of Gujarat, Maharashtra, and Tamil Nadu have risen in this region when there is no superior presence in other parts of India.
- There is a wide gap between efficiency levels and increasing computerization of banks.
- They have a tiered network with state, district and rural level banks. State level banks constitute the top authority.
- There is a lack of risk management system and lack of basic standard banking models.