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This blog is written by Amisha Gupta from George school of law

Cooperative Banking system

Questions:

  1. What is cooperative Banking system? State its object ? (8+8)
  2. Write a note on development of cooperative Banking system? (10)
  3. Write a short note on Credit Cooperative Banking ?
  4. Write the concept, objects and development of cooperative Banking system? (16)
  5. Write the history and development of Cooperative Banking system in India ? (16)

Notes

Write the nature, object, history and development of cooperative banking system in India ?

A Cooperative Bank is a financial entity which belongs to its members who are at the same time the owner and the customer of the bank. it is often established by people belonging to the same local or professional community having a common interest. It is formed to promote the upliftment of financially weaker section of the society and to promote them from the clutches of money lenders who provide loan at an unreasonably high interest rate to the needy. The Cooperative structure is designed on the principles of cooperation, mutual help, democratic decision making and open membership, it follows the principle of 'one shareholder one vote' and 'no profit no loss.'

Cooperative banks are are registered under the the Cooperative society act 1912. These are regulated by Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (NABARB) under the Banking regulation act 1949 and Banking Laws a(to cooperative societies) act 1965.

Characteristics of cooperative bank

Some of the main feature of characteristics of cooperative banks are :

Customer own entities :- 

The members of cooperative bank are both the owner and the customer of the bank does the aim of the Cooperative Bank is not to maximize profits but to provide the best possible services to its members. some of the cooperative banks also admit non members so as to provide them with banking services.

Democratic member control :-

Cooperative banks are old and controlled by members who democratic liya left the board of directors. The basis principle of cooperative 'one man one vote' is followed irrespective of the member of shares held by a member, which ensure that no member enjoys any arbitrary power over other member.

Profit allocation :-

A specified portion of the profit are transferred to statutory reserves and other reserves and then a fair rate of interest is paid on the capital subscribed by the members, apart of this profit can also be distributed to the Cooperative members with legal and statutory limitation in most cases.

Inclusion of rural masses :-

It plays a significant role in the financial inclusion in unbanked rural masses.

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