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Role of cooperative banks in rural development

Durgesh Ashok Badhe Abstract The sustainable development can be conceptually broken into three constituent parts: At present UCBs are contributing in economic sustainability of India. Urban Co-operative Bank is very important role for the sustainable development of India. UCBs through various facilities provided to the society. This bank has also financially helped for various sectors i.

The banks also finance the weaker sections. This paper gives the information about history of co-operative movement, how and when established. It gives the review about the role of co-operative banking in banking sector. UCBs are more importance role in sustainable development of India.

Therefore, this paper is a study of functions of UCBs and its objectives and its contribution in economic development of India.

In addition, the paper includes state wise of UCBs and its branches, investments of government, banks and other societies in UCBs.

Role of RBI / NABARD and Co-operative Banks in Promoting Rural Credit

Urban Co-operative Bank, sustainable development, economic development Introduction In India, the inspiration for the co-operative movement came largely from Germany. The co-operative movement in India was introduced with the chief object of making a break- through in the stagnation of the poor classes, especially the vast majority of agriculturists, who were growing under the heavy weight of indebtedness.

Many of the farmers were literally, born in debt; lived in debt and died in debt, passing on their burdens to those who followed. It was on this background, co-operative movement began in India.

The characteristic feature of Indian co-operative movement is that, it is a credit-oriented movement. The first co-operative credit societies Act was passed in1904. This act provides establishment of credit societies both in rural and urban areas for providing credit facilities of cheaper rates to common man. Thus, the Act recognized the need of urban co-operative banks along with the rural credit co-operatives.

Rural societies were to be organized on the Raifession model, while the urban societies were to be established on the pattern of Herman Schulze. Then after, the work of establishing co-operative societies is growing rapidly.

In the review published by RBI, it pointed out that, urban co-operative credit societies and Banks are the most important features of the urban co- operative movement in India and make up to some extent for the absence of joint stock banking facilities in the small towns. Middle class Marathi people established this society.

It is still functioning Co- operative movement in India was started with a rural bias credit stance. Although co- operatives have been start in various areas and activities, the mainstay of co-operatives is still co-operative credit societies. The urban co-operative credit movement in India started with chief object of catering to the banking and credit requirements of the urban middle classes e.

Small traders, businesspersons, artisans, role of cooperative banks in rural development workers and the salaried people with a limited income etc.

Thus, the people found out the modest means to get away from the clutches of the moneylenders. The movement initially was also expecting to inculcate the habit of thrift and saving amongst them. The distinctive character of this bank is service at a lower cost and service without exploitation.

It has gained its importance by the role assigned to them, the expectations they are supposed to fulfill, their number and the number of offices they operate. Co-operative banks role in rural financing continues to be important day by day, and their business in the urban areas has increased phenomenally recent years mainly due to the sharp increase in the number of primary co-operative banks. In rural areas, as far as the agricultural and related activities are concerned the supply of credit was inadequate and moneylenders would exploit the poor people in rural areas providing them loans at higher rates.

Therefore, co-operative banks mobilize deposits, purvey agricultural and rural credit with a wider outreach, and provide institutional credit to the farmers. Co-operative banks have also been important instruments for various development schemes, particularly subsidy based programmes for poor.

The Co-operative banks in rural areas mainly finance agricultural based activities like; Farming, Cattle, Milk, Hatchery, Personal finance. Some of the forward-looking Co-operative banks have developed sufficient competencies to such an extent role of cooperative banks in rural development they are able to challenge state and private sector banks The exponential growth of Co-operative banks were attributed mainly to their much better contacts with the local people, personal interaction with customers and their ability to catch the nerve of the local clientele.

This bank is start in India to catering to the banking and credit requirements of the urban middle classes. Urban Co-operative banks mobilize savings from the middle and lower income groups and purvey credit to small borrowers, including weaker sections of the society. These banks organize on a limited liability basis; generally extend their area of operation over a town. The main functions of these banks are to promote thrift by attracting deposits from members and non-members and to advance loans to the members.

Prior to 1966, Urban Co- operatives were exclusively under the purview of State Government from March1, 1966 certain provisions of Banking Regulation Act have been made applicable to these banks.

Consequently, the RBI become the regulatory a supervisory authority of Urban Co-operative Banks for their related operations.

Managerial aspects of such banks continue to remain with State Governments under the respective Co-operative Societies Act.

The RBI extends refinance to Urban Co-operative Banks at bank ate against their advances to tiny and cottage industrial units. Urban Co-operative banks are mostly located in towns and cities and cater to the credit requirement of the urban clientele. Primarily, to rise funds for lending money to its members 2. To attract deposits from members as well as non-members 3. To encourage thrift, self-help ad mutual aid among members.

To draw, make, accept, discount, by sell, collect and deal in bills of exchange, draft, certificates and other securities 5. To provide safe deposits vaults. To arrange for the safe custody of valuables 8.

It acts as an agent of its customers 9. To borrow funds and utilize them for giving loans to needy persons Objectives of the study The study sets the following objective; 1. To take the information about state-wise UCBs in India 2.

To study the role of Urban Co-operative Banks in sustainable development of India 3 3. To study the liabilities and assets of Urban Co-operative Banks 4.

To study the investment by Urban Co-Operative Banks 5. To study the finance to priority sectors and weaker sections by Urban Co-operative Banks Research Methodology The present research study exclusively relies on the secondary data. The necessary data has been collect from various reference books, magazines, recently published journals and RBI reports. In Maharashtra, total number of UCBs is 557 33. However, in other states the quantity of UCBs is very low.

From this, it seen that there is centralization of UCBs is only in Maharashtra.

It is very necessary to increase the quantity of UCBs in other states. Other Liabilities 7861 6. Cash in Hand 543 0. Balance with Banks 6. Money at Call and Short 1203 406 1060 1930 1466 727 0. Loans and Advances 46. Other Assets 7454 6. In scheduled, non-scheduled and All UCBs liabilities side considered. The capital, reserves deposits, borrowings and other liabilities.

In scheduled UCBs 2009 and 2010 highest contribution by deposits, that is 76. The next indicator is reserves in scheduled UCBs are the same 10.

Other liabilities decreased in 9. Liabilities side capital and borrowings are same in the booth year 2009 and 2010. The asset of scheduled UCBs in 2009 and 2010 loans and advances is highest 46.

Then the next factors share assets was investments is 30. Investment is increase in 2010. Other assets is 13. Cash in hand and money at call and short notice is remaining the same of both years. Non-scheduled UCBs in 2009 and 2010 liabilities side share of the deposits is highest of 79.

Then the next indicator the reserves are contribution of 10. Capital is increased than scheduled UCBs in 2009 and 2010.

Other liability is contribution of 6. Assets of 5 non-scheduled UCBs are more contribution is loans and advances are 48. The next indicator is investment is more contribution of assets side the 33. Loans and advances are increased by 2009 and investment is increased by 2010. Other assets are 6. Balance with banks increased the 9Per cent decrease the next year 4. Cash in hand are same in the both years. SLR Investment i to vi 26. Central Government Securities 18.

State Government Securities 57. Other Approved Securities -4. Other, if any -7. Where general principles of investment should be taken into consideration i. The State Government Securities is 8 Per cent in 2010 greater than 2009 in 6. Other approved securities are very low in 2009 and 2010 are 0.