Co-operative Bank
Co-operative bank work on the principle of co-operation, self-help, and mutual help. They function with the rule of ‘one number, one vote” and on “no profit, no loss” basis. Co-operative banks as a principle do not look for profit maximization. Co-operative bank performs all the main banking functions of like taking deposit, giving credit and remittance facilities. Co-operative banks provide limited banking products and are functionally specialists in agriculture related products. However the base of co-operative banks has increased and now they are providing housing loans, loans for capital formation as well.
Co-operative banks are the first government sponsored, government supported and government subsidised financial agency in India. Co-operative banks get their funds mainly from
- Deposits
- Central and state governments
- Reserve bank of India
- NABARD
- Other co-operative institutions
Co-operative banks offer both short and long term loans. Some co-operative banks are scheduled banks (included in the second schedule of Reserve Bank of India act).
Co-operative like normal banks subject to Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements. However, these requirements are little bit eased for co-operative banks.
Although the main aim of co-operative banks is to provide cheaper loans and not to maximize profits, they may access profit making money markets to improve their income so as to remain working.
