Which are the Leading Co-Op Banks? Read this List of Top Cooperative Banks in India

The importance of co-operative banks in a developing nation like India can never be undermined. Cooperative banking industry in India has played a pivotal role in uplifting the economically weaker section of the Indian society.

Some of the best cooperative banks in India are Saraswat Bank, Cosmos Bank and Shamrao Vithal cooperative bank. The following sections will look in detail at these leading cooperative banks of India.

Cooperative Banks in India

Cooperative banks in India were started with the aim of helping the poor become free from the clutches of greedy moneylenders who charged high rate of interest.

In the early 20^th century, a cooperative society act was passed. Under this act, a cooperative organization can be formed that would lend money to the members of the said organization. The organization was regional and served only the local people.

Soon the organization became a success and was given the status of bank. Some of the provisions of the Banking regulations act became applicable on the cooperative societies and they became cooperative banks of India.

Read: Top 10 Microfinance Companies in India: Best MFI Guide

Objectives of Cooperative Banks

The main function of cooperative bank in India is to provide financial help to the deserving at the lowest rate of interest.

Financial assistance can be given in the following areas:

• Farming
• Cattle rearing
• Milk production
• Personal loan
• Educational loan
• Home finance
• Self-employment
• Small industries
• Any other agriculture related activity

Cooperative banks main goal is to provide assistance and not to earn profit.

One of the main differences between a commercial bank and a cooperative bank is their take on profit making. Commercial banks objective is to make maximum profit whereas cooperative banks thrive on the policy of “no profit and no loss”.

Structure of Cooperative Banks in India

Cooperative banks in India are three tiered. They are structured as follows:

Tier-1 State Cooperative Banks – They are the apex institutes of all the cooperative banks in the particular state. They act as a link between these cooperative banks and The Reserve Bank of India.

Tier-2 District/Central Cooperative Banks – These cooperative banks work at the district level. The role of cooperative banks at this level is to provide funds to the primary cooperative banks.

Tier-3 Urban/Primary Cooperative Banks – These are rural or urban cooperative banks. They deal directly with the local people and provide loans to them. They also open deposits accounts of the local people.

Types of Cooperative Banks in India

Based upon the 3-tier structure of cooperative banks in India, they are divided into the following types:

State Cooperative Banks: Currently there are 33 state cooperative banks in India.

District Cooperative Banks: The district cooperative banks are of two types:

• Cooperative Bank Union: The members can only be other cooperative societies.
• Mixed Cooperative Bank Union: The members can be cooperative societies and individuals too.

By 2014 there were a total of 370 district cooperative banks in India.

Some states do not have district cooperative banks. They are: Andaman & Nicobar, Arunachal Pradesh, Assam, Chandigarh, Delhi, Goa, Manipur, Meghalaya, Mizoram, Nagaland, Pondicherry, Sikkim, and Tripura.

Urban Cooperative Bank: Primary cooperative bank located in urban areas. There are around 1551 ucbs in India.

Rural Cooperative Bank: Primary cooperative banks located in rural areas. There are around 93,612 rcbs in India.

Here is a chart that shows the number of cooperative banks in India and their asset size.

Also See: Lending Business: How to Start a Finance Company in India

Advantages of Cooperative Banks in India

With the introduction of cooperative banks in India, the Indian society especially in the rural areas has seen some major changes in farming practices.

• Freedom from the clutches of moneylenders: The cooperative bank provides loans at low rate of interest thereby eliminating the dominance of moneylenders.
• Encouragement to save more: The various deposit schemes of cooperative banks encourages people to save more.
• Better farming practices: Cooperative banks provide loans for purchase of better machinery and improved seeds.
• Encouragement for self-employment: Cooperatives provides finance to people so that can start their own business.

It is true that cooperative banks provide loans at low interest rate than commercial banks and other lending institutes. But the loan approval process of these cooperatives is quite cumbersome and lengthy.

Effect of Demonetization on Cooperative Banks of India

The effect of demonetization on cooperative banks in India has been severe. Farmers who are the main customers of Indian cooperative banking business have also been badly hit.

Here are some of the effects on cooperative banks post demonetization:

• Cooperative banks were not allowed to accept demonetized notes and hence went through a severe liquidity crisis.
• The banks had to suffer losses because of the interest that piled on the devalued notes that the bank had.
• Due to cash crunch the banks were unable to disperse loan amounts among the farmers. This led to delayed sowing resulting in losses in terms of farm productivity.

Despite the crisis some cooperative banks managed to stay afloat. Here is the list of cooperative banks in India that have survived all ups and downs and have emerged winners. This list has been produced by the Reserve Bank of India.

List of Top 10 Best Cooperative Banks in India

1. Saraswat Cooperative Bank

Saraswat Cooperative bank was formed in 1918. The bank has its headquarters in Mumbai.

The bank has operations in 6 states of India. They are Goa, Gujarat, Delhi, Madhya Pradesh, Maharashtra and Karnataka.

The bank was awarded the “Best technology bank of the year” award in 2019.

Saraswat cooperative bank is one of the best cooperative banks in India.

2. Cosmos Cooperative Bank

Cosmos Cooperative Bank is one of the oldest cooperative banks in India having started its operations in 1906.

The headquarters of the bank are located in Pune.

Cosmos CO-OP Bank is multi-state and has operations in states like Gujarat, Madhya Pradesh and Tamil Nadu.

The bank was the first cooperative bank to start a currency chest, one of the first banks to technically upgrade itself by implementing CBS and third cooperative bank to receive Authorized dealership.

3. Shamrao Vithal Cooperative Bank

 

Shamrao Vithal Cooperative Bank, which is also known as SVC bank is one of the most trusted cooperative banks in India. It was established in 1906.

The bank has a presence in 10 states and is headquartered in Mumbai.

Shamrao Vithal Cooperative Bank has won the “Best Urban Cooperative Bank award” in the year 2018 given by Brihan Mumbai Nagari Sahakari Banks Association.

4. Abhyudaya Cooperative Bank

Abhyudaya Cooperative bank was started in 1965 in Mumbai.

The Bank is operational in 3 states.

Abhyudaya Cooperative bank won the “Best IT enabled cooperative bank” award in the year 2014-15.

It is one of the largest cooperative banks in India having more than 2 lakh members and more than 17 lakh depositors.

5. Bharat Cooperative Bank

Bharat cooperative Bank was established in the year 1978. Its headquarters are located in Mumbai.

The bank has a large customer base of 5.5 lakh which is spread across Maharashtra, Gujarat and Karnataka.

It won the “Best urban cooperative bank award” in 2017 and “Best Information technology” award in 2016.

Despite being relatively new in the cooperative banking sector, Bharat cooperative bank has managed to earn a slot in the topmost cooperative banks in India list.

6. TJSB Cooperative Bank

The Thane Janata Sahakari Bank was formed in 1972 in Thane, Maharashtra.

Starting with just one branch in Thane, today the bank has 136 branches in 5 states making it one of the biggest cooperative banks in India.

Thane Janata Sahakari Bank has received awards for its mobile application and payment systems.

7. Punjab & Maharashtra Cooperative Bank

Punjab & Maharashtra Cooperative bank was started in 1984 with a single branch in Sion, Mumbai. Since then the bank has opened 137 branches in 6 states.

PMC bank is the youngest bank to have received the schedule bank status.

In its 35 years of service the bank has received many awards and accolades making it one of the top 10 cooperative banks in India.

[The bank has been under All Inclusive Directions of the RBI from the close of its business on September 23, 2019, which has been extended till March 31, 2022. PMC Bank merger with Unity Small Finance Bank awaits govt approval]

8. Janata Cooperative Bank

Janata Cooperative bank was formed in 1949 in Pune. The bank has 70 branches across Maharashtra and Gujarat.

The bank has been conferred with many awards like, “Best green initiative”, “best ATM initiative and “best bank in the deposit category of more than 5000 crore” making it one of the leading cooperative banks in India.

9. Kalupur Commercial Cooperative Bank

Kalupur cooperative bank was established in 1970 in Kalupur, Gujarat.

The bank is a multi-state bank having its branches in Gujarat and Maharashtra. It is one of the top most cooperative banks in Gujarat.

Kalupur cooperative bank became the first cooperative bank in Gujarat to be on RTGS. It was also the first cooperative bank in Gujarat to get Authorized dealership.

10. NKGSB Cooperative Bank

NKGSB cooperative bank is one of the oldest cooperative banks in the country having started its operations in 1917.

The bank operates in many states and has a total of 109 branches making it one of the largest cooperative banks in India.

Read: Top 10 NBFCs in India (Non-Banking Financial Companies)

Wrap up – Biggest Cooperative Banks of India

Despite the noble intentions of the cooperatives, they have not been as successful as expected.

Some problems that plague the cooperative banking sector in India are large over dues, inadequate supervision and management, lengthy and cumbersome process of loan approval.

In order to overcome these problems RBI started merger schemes in 2010. This has led to nearly 127 mergers till date. Many weak banks were merged with the big cooperative banks like the ones listed in the article.

This has helped to consolidate and strengthen the cooperative banks in India and has also increased the trust of its customers.