Explain the term of Cooperative Banking
Cooperative banking is a type of banking that is based on the principles of cooperation, mutual self-help, and democratic ownership. It is a form of banking where the depositors and borrowers are also the owners of the bank, and they share the profits and losses of the bank.
Cooperative banks are organized as cooperative societies, which are governed by a board of directors elected by the members of the society. Each member of the cooperative bank has an equal say in the decision-making process, regardless of the size of their deposits or loans. This democratic ownership structure ensures that the bank’s operations are aligned with the interests of its members and the community it serves.
Cooperative banks offer a wide range of banking services, including savings and current accounts, loans, and other financial products. They primarily focus on serving the needs of small and medium-sized enterprises, agriculture, and rural communities, which may be underserved by larger commercial banks.
Cooperative banks in India are regulated by the Reserve Bank of India (RBI) and the Registrar of Cooperative Societies in each state. They are subject to the same prudential norms and regulations as other banks and are required to maintain adequate capital and liquidity levels.
Overall, cooperative banking plays an important role in promoting financial inclusion, supporting local businesses, and strengthening communities by providing access to affordable financial services.
