Page 1 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 317
Financial Issues of Cooperative Banks in India
Name : Mahak
Designation : Student of m.com final year
Ugc Net qualified in July 2018
ABSTRACT
Cooperative bank is a financial organization which is introduced on the
basis of the cooperative needs which deals with the ordinary banking
institutes. In order to establish a cooperative bank, the required fund is
collected from shares, deposits and grant loans. In case of cooperative
banks, the limited liability of share is issued.
Also, one power of vote is given to one share-holder in the cooperative
bank with the condition that a share-holder can take a number of shares.
These banks are engaged in the activities regarding the rural credit and
offer financial aid for all the activities related to the agriculture and rural.
The basic structure of the cooperative banks in India is found to be federal
where the central cooperative and state cooperative banks are established.
The current paper highlights the financial issues of cooperative banks in
India.
KEYWORDS:
Cooperative, Bank, Financial
Page 2 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 318
INTRODUCTION
The credit societies related to the cooperative banks are used to locate in
the rural areas of the country. The basic objective of launching the
cooperative banks in India is to deal with the problem of rural credit.
There are two major types of cooperative banks in India i.e. agricultural
and non-agricultural.
Most of the cooperative banks of the country come in the category of
agricultural where all the activities are done in favor of farmers and
agriculture. There are few cooperative banks in India which support the
non-agricultural activities.
The organizations of the agricultural credit are further classified into two
institutions i.e. short term and long term. And this short term credit
institutes are further classified into three institutes i.e. state cooperative,
central cooperative banks and primary agricultural credit societies where
rural credit activities are performed.
Page 3 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 319
Figure1: Classification of Cooperative credit institutions
The role of state cooperative banks is to offer a medium by which the
credits are provided by the Reserve Bank of India to the cooperatives and
thus, helps in the finance related to the rural areas. Their role is to work
as balancing centers for cooperative banks.
They play an important role in providing the services like finance and
control the societies of primary credit. The fund of the state cooperative
banks comprises of the share capital and reserve types. The fund is
deposited with the help of the cooperative societies and central
cooperative banks.
State cooperative banks usually borrow most of the needed fund from the
Reserve Bank of India and rest of the fund is borrowed from the state
governments and other sources.
The major role of state cooperative banks is to provide the facility of
loans and advances to the cooperative societies. It is observed that the
most of the issued loan is for the short period and this loan is mostly
granted for the agricultural activities.
On the other hand, the working capital of the central cooperative banks
is measured in terms of their own funds, borrowings, deposits and other
sources. Here, own fund is comprised of the share capital which is
mostly contributed by the state government and other sources. Here, the
