4.9 Co –Operative Banking

 

Most of the major banks have offices in cities and major towns and do not have offices in villages. Though people in rural area can deposit their savings in post offices in their villages or nearby village, for their loan requirements they need to travel to major places to get loans from Banks(note Post offices do not give loans).  To cater to the needs of rural people we have co-operative Banks in small places

 

The important differences between Banks and Cooperative Banks are:

 

1.      The co operative Banks give loan at lower rates (Because their expenses are less in small places)

2.      They offer better interest rates on deposits

3.      Since loan seekers are from the local area, these banks know the people very well and hence  give loan with less strict   procedures(These Banks may not insist on  guarantors

4.      Banks give agricultural loans and for self employment and other activities

5.      Often these banks give loan for small amounts

6.      They mainly provide short term loans.

7.      They provide friendly atmosphere and good customer service in small places

8.      Easy sanction of loans against gold and other ornaments (So that borrowers are not dependent on money lenders who charge high interest)

9.      They take decisions fast on all matters

 

Like other major banks, the co-operative banks also accept deposits from public and give interest on deposits to depositors

Public can open  Savings Bank account(SB), current account(CA), Fixed Deposits(FD), Cumulative term deposits(CTD)  in

Co-operative banks. The procedure and operation of the these accounts in co-operative Banks are similar to  those in big Banks

There is no such restriction that the co-operative Banks need to have offices only in villages or towns, they can have offices in cities also.

Co-operative Banks operating in non rural areas are called urban co-operative Banks.

Deposits made in co-operative Banks are less secure when compared to deposits made in Post offices and big Banks.

Employees of organizations can also form co-operative societies similar to co-operative banks

 

4.9 Summary of learning

 

 

No	Points learnt
1	Need for  Co – operative banks
2	Role  of  Co – operative banks