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TOPIC: COOPERATIVE BANKS

INTRODUCTION OF COOPERATIVE BANK WHAT IS COOPERATIVE BANK DEFINATION OF COOPERATIVE BANK FEATURES OF COOPRAIVE BANK TYPES OF COOPERATIVE BANK FACT OF COOPERATIVE BANK CURRENT SCENARIO

INTRODUCTION: COOPERATIVE BANKSCooperative banks started in INDIA in1904. The first urban cooperative credit society was registered in CANJEEVARAM (KANJIVARAM) in the erstwhile Madras province in October, 1904. They are the primary financiers of agricultural activities, some small-scale industries and self-employed workers. The ANYONYA CO-OPERATIVE BANK in India is

considered to have been the first cooperative bank in ASIA. They perform all the activities as all banks perform.

WHAT IS COOPERATIVE BANKCOOPERATIVE BANK: Co-operative banks aresmall-sized units organized in the co-operative sector which operate both in urban and non-urban centers In India, co-operative banks finance small borrowers in industrial and trade sectors, besides professional and salary classes.

DEFINATION OF COOPERATIVE BANK

DEFINATION : It is a business organization owned and managed by a group of individual for their mutual benefit

TYPES OF COOPERATIVE BANKS

Function of cooperative bankyy

Duality control: cooperative banks were control byboth the regulatory RBI as well as GOVERNMENT. FUNCTION CONTROLLED BY RBI: Banking related functions (viz. licensing, area of operations, interest rates etc.) were to be governed by RBI. FUNCTION CONTROLLED BY GOVERNMENT: registration, management, audit and liquidation, etc. governed by State Governments. PROMOTE BACKWARD AREA: the main function of cooperative banks is to open the branches in backward area support from RBI and Government. Financing rural sector : Farming Cattle Milk Personal finance Financing rural sector : Self-employment ,Small scale units Home finance, Consumer finance etc

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Features of cooperative banks

PURPOSE: First important feature of cooperative banks is not maximize profit but to provide the best product and services to its member VOTING RIGHTS: Members of cooperative banks democratically elect board of directors. Members usually have equal voting rights according to the co-operative principle of one person, one vote PROFIT SHARING: cooperative banks divided their profit either through dividend or through an interest which is related to number of shares held by the members AREA OF OPERATION: as there is limited capital the cooperative banks operates under local areas REGISTRATION : It is registered under the cooperative societies act 1965

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SOURCES OF FUND :Their main sources of fund are(a) central and state government,(b) the Reserve Bank of India and NABARD, (c) other co-operative institutions, (d) ownership funds and, (e) deposits or debenture issues CONTINUOUS EXISTENCE: cooperative society can enjoy long life even if death of member or retire of member.

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Type of cooperative banksURBAN COOPERATIVE BANKS

STATE COOPERATIVE BANK

URBAN COOPERATIVE BANKS

STATE LAND DEVELOPMENT

STATE LAND DEVELOPMENT

CENTRAL COOPERAIVE BANK

STATE COOPERATIVE BANK

CENTRAL LAND DEVELOPMENT

PRIMARY AGRI CREDIT SOCIETY

NABARD

PRIMARY LAND DEVELOPMENT

STATE COOPERATIVE BANKSy

TIER : state cooperative banks is the first tier of cooperation credit structure BRANCHES : there are 28 state cooperative banks with branches in the country .they are the apex banks in cooperation credit structure . AIM: these state cooperative bank are advance loan to central cooperative banks REGULATION: they also coordinate & regulate the working of CCBs LINK: they form a link between RBI, NABARD, OTHER LOWER LEVEL COOPERATIVE BANKS. SOURCE OF FUND: They get 50-90% of advances from NABARD, DEPOSIT FROM PUBLIC, GENERAL RESERVES LENDING AMOUNT: SCBs annually lends Rs7700 to CCBs & PACS

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Central cooperative banksy

TIER : district central cooperative banks is the second tier of cooperation credit structure AIM: district central cooperative bank are advance loan to primary agriculture credit society (PACS) cooperative banks so they can fulfilled need or requirement of farmer BRANCHES : there are 364 district central cooperative banks with branches in the country . MANAGE BY: district central cooperative banks by some private individual as shareholder as well as management. Most of these banks are under controlled by political leaders LINK: they form a link between state cooperative banks & primary agriculture credit society SOURCE OF FUND: They get advances from state government , NABARD, RBI.

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PRIMARY AGRICULTURE CREDIT SOCIETY (PACS)y

TIER : primary agriculture credit society is the third tier of cooperation credit structure. COMMENCE: primary agriculture credit society started by ten or more member in village. MANAGEMENT : the management was under elected body of a PRESIDENT, TREASURER & SECRETARY. PERIOD OF LOAN: primary agriculture credit society provide short term loan to farmer for 1year for Agriculture purpose RATE OF INTEREST: primary agriculture credit society provide on 10 to 12per annum of rate of interest. LENDING AMOUNT: in 1950-51 they advance loans worth Rs 23 crore which rose to 200 crore in 1960-61 and 14000 crore in 1997-98 & entered into weaker section of credit society

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Shortcomings of Dual Control

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Banking related functions (viz. licensing, area of operations, interest rates etc.) were to be governed by RBI under Banking Act. Registration, management, audit and liquidation, etc. governed by State Governments as per the provisions of respective State Acts, in 1968.

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Contd Contdy

Y V Reddy (Reserve Bank Governor) "It has been difficult to ensure effective coordination owing to the problems of dual control (over UCBs) in the matters of governance, which have a bearing on prudential regulation,"

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Problems: Misutilisation of resources by the management: The problem the regulator faces in monitoring these banks arises due to the sheer number of banks. This makes it extremely difficult if not impossible for the regulator to gather data to detect and suggest prompt corrective measures.

Prompt regulatory action: There are several areas where the jurisdictions of RBI and state governments overlap. This leads to delays in implementation of corrective policies in banks that are suspected to engage in mismanagement.

Contd Contd Political interference The involvement of politicians in their functioning. It is commonly argued that politicians use cooperative banks to allocate favours to extract political rents. This makes banks weak as they are used to allocate loans in exchange for political favours. The interference of politicians also creates hurdles for regulators in implementing corrective measures in mismanaged banks.

Lack of professional management As the Banks have dual control lot of their time, resources, funds, and man power is utilized in managing these two regulators. So a professional approched is lacking

WEBLOGRAPHY& BIBLOGRAPHYWWW.COOPERATIVEBANKS .COM y WWW.INDIAN BANKINGSTRUCTURE.COM y WWW.WIKIPEDIA .COM y BOOK NAME: BUSINESS ASPECT OF BANKING&INSURANCEy

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