IFS02 CO-OPERAT

8/3/2019 IFS02 CO-OPERAT

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CO-OPERATIVE BANKS V/S COMMERICAL BANKSOBJECTIVES AND FUNCTIONS

Submitted by: Group-2Abhishek Tiwari

Anish PandeyAnkit Surana

Anubhav Srivastava


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Co-Operative Bank

Co-operative Banks are organized and managed on the principal of co-

operation, self-help, and mutual help.

Function with rule of one member, one vote and no loss, no profit basis.

Co-operative Banks , as a principle, do not pursue the goal of profit

maximisation.

Dominant Feature of Co-Operative Bank

Maximizing profits and the rate of return on capital are not the dominantbusiness objectives of cooperative banks.Cooperative banks are essentially owned by their members & ownership is at

the local or regional level. Cooperative banks are often part of a national network with an integrated

Structure.Cooperative banks have a close proximity to their members and customers.Rare for a cooperative bank to be listed on a stock exchange although some

cooperative banks have subsidiaries which are listed.Ownership stakes in cooperative banks are not tradable in an open marketGenerally, profits are retained within the bank with only limited distributions

being made.


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Distinguish Between Commercial Bank and Co-operative Bank

Parameters Commercial Banks CoOperative Banks

1. Registration Commercial Banks are requiredto be registered under BankingRegulation Act, 1949

Co-operative Banks arerequired to be registered underthe Co-operative Societies Act,of the concerned state.

2. Main Objective Commercial Bank is to acceptdeposits from public for thepurpose of lending to industryand commerce

Co-operative Bank is to acceptdeposits from the members andthe public for the purpose ofproviding loans to farmers andsmall businessmen with a mottoof service

3. Availability of Funds Massive funds are available atthe disposal of Commercial

Banks.

Limited funds are available atthe disposal of Co-operative

Banks

4. Area of Operation Commercial banks operate over a larger area. Some commercialbanks even have branches inforeign countries

The area of operations of Co-operative Banks is limited andmostly confined to State. Theydo not operate at national levelnor international level
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Parameters Commercial Banks CoOperative Banks

5. Nationalization At present 20 CommercialBanks have been nationalizedin India

In India Co-operative Banks arenot nationalized.

6. Merchant Banking Services Commercial Banks providemerchant banking servicessuch as advising the companiesregarding the public issue ofshares.

Co-operative Banks do notprovide merchant bankingservices.

7. Mutual Funds Commercial Banks in Indiasuch as Canara Bank, Bank ofIndia, State Bank of India, dooperate mutual funds.

At present co-operative banksin India do not operate mutualfunds.

8. Basis of operation Commercial banks operates onthe commercial principles. They

operate to earn a profit.

The basis of operations is co-operative lines, i.e. service to its

members and the society.

9. Rate of Interest The Commercial Banks providea lesser rate of interest ascompared to co-operativebanks.

The Co-operative Banksprovide a little higher rate ofinterest on deposits ascompared to commercial banks


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IFS02 CO-OPERAT