Union Minister of Cooperation Shri Amit Shah has stated that cooperative banks will not be treated as “second class,” but that they must adopt modern and transparent banking methods in order to compete.



The Minister urged the Urban Cooperative Banks (UCBs) to implement institutional reforms, as they account for only 3.25% of total bank deposits and 2.69% of total advances in the country.


About Cooperative Banks –

Co-operative banks in India are registered under the States Cooperative Societies Act. The Co-operative banks are also regulated by the Reserve Bank of India (RBI) and governed by the  – Banking Regulations Act 1949, and Banking Laws (Co-operative Societies) Act, 1955.


Features of Cooperative Banks –

  • Customer Owned Entities – Co-operative bank members are both customer and owner of the bank.
  • Democratic Member Control – Co-operative banks are owned and controlled by the members, who democratically elect a board of directors. Members usually have equal voting rights, according to the cooperative principle of “one person, one vote”.
  • Profit Allocation – A significant part of the yearly profit, benefits or surplus is usually allocated to constitute reserves and a part of this profit can also be distributed to the co-operative members, with legal and statutory limitations.
  • Financial Inclusion – They have played a significant role in the financial inclusion of unbanked rural masses.
  • Supervision – In India, co-operative banks are registered under the States Cooperative Societies. They also come under the regulatory ambit of the Reserve Bank of India (RBI) under two laws: the Banking Regulations Act, 1949, and the Banking Laws (Co-operative Societies) Act, 1955.