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Co-operative banks are a group of individuals organized under the provisions of the Co-operative societies Act. The main objective of co-operative banks is to grant cheap credits to their members. They are based on the principle of self-reliance and mutual co-operation. The co-operative sector is very much helpful for rural people. The Co operative banks in India started operation almost 100 years ago. Though the co operative movement originated in the West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The cooperative banks in India play an important role even today in rural financing. The business of cooperative bank in the urban areas also has increased astonishingly in recent years due to the sharp increase in the number of primary co-operative banks.
Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative bank is also regulated by the Reserve Bank of India RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.
Co-operative banking system in India has the shape of a pyramid a three tier structure, such as:
The exponential growth of Co operative Banks in India is accredited mainly to their much better local reach, personal interaction with customers, and their ability to catch the nerve of the local customers.
Cooperative banks in India finance rural areas under :