What are the differences between Commercial Banks and Co-operative banks?
As per the website of RBI, there are 31 state Co-operative banks working in the country in 2017. The number of central co-operative banks in India was 370 in 2013-14. The top 10 states in terms of the number of central co-operative banks were: Uttar Pradesh (50), Madhya Pradesh (38), Maharashtra (31), Rajasthan (29), Tamil Nadu (23), Andhra Pradesh, Bihar, Karnataka, Punjab and Haryana in 2013-14. Presently there are 81 commercial banks in operational in India.
The functions and objectives of the commercial banks are different from the Co-operative banks. In this article we are giving some notable difference between these two types of banks.
1. Commercial banks operate with the approach of commercialization while Co-operative banks woks on the principle of co-operation. That is why state Co-operative banks get loans at least 2% cheaper from the Reserve bank of India.
2. Commercial banks have been constituted by an act passed by the parliament while Co-operative banks are constituted by different sates under various acts related to Co-operative societies of various states.
3. Co-operative banks have three tier set up in India i.e. state Co-operative at the apex level, central/district co-operative banks at the middle level and primary co-operative banks at the lower level while commercial banks don’t have any such tier system in India.
4. Every commercial bank has the authority to take loan directly from the Reserve Bank of India while in Co-operative banks, only state Co-operative banks can enjoy this facility.
5. Commercial banks can establish its branches in any district/state of the country while on the other hand Co-operative banks can operate its activities only within limited area. As district cooperative banks can perform banking activities only within the boundary of the concerned district and Primary Co-operative banks can operate only in concerned villages.
Image source:The Indian Express
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6. Commercial banks can open branches in the foreign countries but Co-operative banks can’t do so.
7. Banking Regulation Act, 1949 is completely applicable to all the commercial banks of India while Co-operative banks are partially obliged to follow this act.
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8. Examples of commercial banks are: SBI, PNB, BOB, ICICI and HDFC etc.
9. Examples of Co-operative banks are: Andhra Pradesh State Co-operative Bank Ltd, The Bihar State Co-operative Bank Ltd, Chhatisgarh Rajya Sahakari Bank Maryadit,The Goa State Co-operative Bank Ltd, The Gujarat State Co-operative Bank Ltd, Haryana Rajya Sahakari Bank Ltd etc.
In the conclusion it can be said that the commercial banks have more freedom and resources as compare to the Co-operative banks; so commercial banks have major role to play in the economy as compare to the Co-operative banks.