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Understanding the Cooperative Banking Structure in India

Some cooperative banks are older like their peers in the commercial banking sector. There are cooperative entities as old as 1906 & later, who first ventured into the cooperative sector as a cooperative credit society serving limited clientele in the agricultural sector with limited membership holding shares. Later on, they venture into Housing & other sectors and further on to banking services. They are mostly founded to serve limited community members in remote areas of our country who are short of institutional finance.

Today, co-operative banks operate across the country side-by-side with commercial banks and play a crucial role in providing need-based finance, especially for people engaged in agricultural and agriculture-based operations including farming, cattle, milk, personal finance, etc, along with some small industries and self-employment driven activities.

Consumer Voice compared the service charges of 10 Cooperative Banks to recommend the Best Cooperative Bank. Read More

Structure of cooperative banks in India



  • (These are small societies Catering to agricultural needs in villages)
  • (Regulators-STATE GOVT/NABARD)


  • (Employees’ Credit Societies and Credit Societies come under this purview. These are small societies which cater to credit needs of city dwellers)
  • (Regulator-STATE GOVT)


State Cooperative Banks (First tier)
  • They obtain ‘license to operate’ from RBI under Banking Regulation Act
  • They operate as the apex bank for all the cooperative societies in the State
  • They can seek permission from State Govt /RBI to open their branches outside the State
  • RBI provides credit to cooperative societies through them at concessional rate (below what is provided to commercial banks)
  • Regulator: STATE GOVT/NABARD/RBI (limited control)
District Central Cooperative banks (2-tier)
  • They operate as the apex bank for all cooperative societies in the District
  • Main activity is to fund (lend money) affiliated Primary Societies
  • They accept deposit from public & lend for different purposes
  • Regulator: STATE GOVT/ NABARD & partial control of RBI
Primary/ Urban Cooperative Banks (3-tier)
  • They are non-agricultural credit societies
  • They operate mostly in urban & semi-urban areas
  • They provide trade/housing finance & other purposes
  • They accept deposits from public; but they also work on borrowed capital
  •  Regulator: STATE GOVT/RBI (Partial Control)
Urban Cooperative Banks
  • Their banking services are neighborhood friendly
Divya Patwal


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