Structure and Regulation of Cooperative Banks

The Cooperative Banking structure is federal in nature.,with three tier linkages between state,district and village level institution.At the state level ,we have State Cooperative Banks (SCBs) and State Land development Banks (SLDBs).At district level ,The Central Cooperative Banks(CCBs) or District Central Cooperative Banks (DCCBs) and Central Land Development Banks(CLDBs).Then ,At Village level ,the Primary Agriculture Credit Societies (PACSs) and the Primary Land development Banks (PLDBs) and branches of SLDBs.

The lower tiers are member of and shareholders of the the immediate higher tier.

Besides, there are the urban Co-operatives banks (UCBs) or Primary Cooperative Banks (PCBs) which are outside this federal structure.

Though Federal in its organizational structure ,the system is integrated vertically on the basis of functional responsibilities of various components of the system.The SCBs ,CCBs, and PACSs form the short – term and medium -term credit structure and it is same in all the state. The land development banks at various level make the long term credit structure ,which not uniform in all the states.

The state level cooperative banks are said to be the apex institutions in this federal structure.However, the apex institution from the point of view of promotion ,supply of resources ,supervision and control ,are the govt ,RBI,NABARD , and National Cooperative Bank of India ( NCBI).The SCBs and SLDBs are in intermediate position between the institution just mentioned on the hand, and cooperative banks on the other.

Fund Channels

The SCBs coordinate and regulate the working of CCBs .They act as custodian of surplus funds of the CCBs and supplements them by attracting deposit and by obtaining loans from RBI .The CCBs mobilize resources in district to finance their members ,and they also channelize funds from the SCBs to Primary Credit Societies like PACSs.

Regulation-

Cooperative Banks are also regulated by the RBI and govern by the Banking Regulation Act ,1949 and Banking Laws Act ,1965. Rural Cooperatives banks  are regulated by the state registrar of co-operatives.

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