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What are the differences between Commercial Banks and Co-operative banks?

11-MAY-2017 15:15

    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.


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    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.

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    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.
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    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.
    Image source:Puducherry
    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.

    Structure of Banking Sector in India

    DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

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