FAQs on co-operative banks

What are co-operative banks?

Co-operative banks are small-sized units organised in the co-operative sector which
opreate both in urban and non-urban centres.

What is the role of co-operative banks in India’s banking structure?

In India, co-operative banks finance small borrowers in industrial and trade sectors,
besides professional and salary classes.

What functions do co-operative banks perform?

Co-operative banks perform the main banking functions of deposit mobilisation,
supply of credit and provision of remittance facilities. They provide limited banking
products and are specialists in agriculture-related products.

Who acts as the regulator for co-operative banks?

Co-operative banks are regulated by the Reserve Bank of India and governed by the
Banking Regulations Act, 1949, and Banking Laws (Co-operative Societies) Act,
1965. Rural co-operative banks are regulated by state registrar of co-operatives.

What is the minimum capital requirement and membership required for co-
operative banks ?
Urban co-operative banks should have a minimum capital of Rs 4 crore and a
membership of at least 3,000 in a population of more than Rs 10 lakh. The figure of
minimum membership keeps decreasing with a decrease in population.

What is the minimum Statuatory Liquidity Ratio (SLR) for co-operative banks?
Urban co-operative banks are required to maintain a SLR equivalent to 25% of net
demand and bank liabilities.

What are weak urban co-operative banks?

Urban co-operative banks are divided into weak and urban banks, based on certain
parameters of their performance. India has a total of 261 weak banks at the end of
June 2001.