Co-op Societies are not banks, RBI cautions

  Jan 01, 2022

Co-op Societies are not banks, RBI cautions

Q Why is it in News ?

A The Reserve Bank of India (RBI) has cautioned members of the public not to deal with cooperative societies undertaking banking business by adding ‘bank’ to their names.

Q Who can use ‘Bank’ title?

Q  What is Cooperative Banking?

  1. Banking Regulations Act 1949
  2. Banking Laws (Co-operative Societies) Act, 1955

Q What are Features of Cooperative Banks ?

Q What is history of Cooperative Banking in India ?

Q What is Structure of Cooperative Banking ?

Various facets of cooperatives in India

Q What is Importance of Cooperative Banks ?

(1) Alternative Credit Source:  The main objective of the cooperative credit movement is to provide an effective alternative to the traditional defective credit system of the village moneylender.

(2) Cheap Rural Credit: Cooperative credit system has cheapened the rural credit by charging comparatively low-interest rates, and has broken the money lender’s monopoly.

(3) Productive Borrowing:  The cultivators used to borrow for consumption and other unproductive purposes. But, now, they mostly borrow for productive purposes.

(4) Encouragement to Saving and Investment: Instead of hoarding money the rural people tend to deposit their savings in cooperative or other banking institutions.

(5) Improvement in Farming Methods: Cooperative credit is available for purchasing improved seeds, chemical fertilizers, modern implements, etc.

(6) Financial Inclusion: They have played a significant role in the financial inclusion of unbanked rural masses. They provide cheap credit to the masses in rural areas.