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Cooperation dates back as far as human beings have been organizing for mutual benefit. Tribes were organised as cooperative structures, allocating jobs and resources among each other, only trading with the external communities. In alpine environments, trade could only be maintained in organized cooperatives to achieve a useful condition of artificial roads such as Viamala in 1473.[3] Pre-industrial Europe is home to the first cooperatives from an industrial context.[citation needed] Robert Owen (1771 - 1858) was a social reformer and a pioneer of the cooperative movement. In 1761, the Fenwick Weavers' Society was formed in Fenwick, East Ayrshire, Scotland to sell discounted oatmeal to local workers.[4] Its services expanded to include assistance with savings and loans, emigration and education. In 1810, Welsh social reformer Robert Owen, from Newtown in mid-Wales, and his partners purchased New Lanark mill from Owen's father-in-law David Dale and proceeded to introduce better labour standards including discounted retail shops where profits were passed on to his employees. Owen left New Lanark to pursue other forms of cooperative organization and develop co-op ideas through writing and lecture. Cooperative communities were set up in Glasgow, Indiana and Hampshire, although ultimately unsuccessful. In 1828, William King set up a newspaper, The Cooperator, to promote Owen's thinking, having already set up a co-operative store in Brighton.[citation needed] The Rochdale Society of Equitable Pioneers, founded in 1844, is usually considered the first successful cooperative enterprise, used as a model for modern co-ops, following the 'Rochdale Principles'. A group of 28 weavers and other artisans in Rochdale, England set up the society to open their own store selling food items they could not otherwise afford. Within ten years there were over 1,000 cooperative societies in the United Kingdom.[citation needed] Other events such as the founding of a friendly society by the Tolpuddle Martyrs in 1832 were key occasions in the creation of organized labor and consumer movements Throughout the 1990s, the The Co-operative Bank s call centre in Skelmersdale (CS-Skem) was involved with a number of community initiatives. As one of the largest employers in Skelmersdale and with 85% of staff living in the local area, the development of local young unemployed school leavers is key to their success as these are their future customers and employees.
what is co operative bank:-

According to the International Co-operative Alliance Statement of co-operative identity, a cooperative is an autonomous association of persons united voluntarily to meet their common

economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Co-operatives are based on the values of self-help, selfresponsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

The 7 co-operative principles are :

y y y y y y y

Voluntary and open membership Democratic member control Member economic participation Autonomy and independence Education Training information


In order to measure and evaluate the impact of CS-Skem on the Bank and the community it was decided to bring all the initiatives that had elements of educational support, irrespective of age/status together under the banner of Project Formation . The project definition, to make a tangible difference to the lives of all those who are neighbours of the Bank by offering a variety of methods to assist lifelong learning, is introduced to all new staff on the first day of their induction training and is regularly promoted to staff. To qualify for Project Formation status the project must provide a high quality provision of support, personal development and employability training or improve the employment prospects of students/adults particularly those who are socially and economically excluded. The programme also focuses on removing barriers that prevent access to training and employment opportunities. The programmes are evaluated at all stages to consider the impact on CS-Skem staff and on the projects supported.

25% of staff working in CS-Skem are or have been directly involved in the project. Every member of staff has been indirectly involved in fund raising.

1600 hours of bank time was given to the project in 2003, which equates to 10% of the whole of CFS s work in the community. Work experience programme/package is now used throughout CFS as a result of sharing best practice. During 2003, 39 students completed structured work experience programmes at CSSkem. The bank reported an increase in the recruitment of young customers in and around Skelmersdale since the introduction of Project Formation.

Working with 17 local schools CS-Skem have developed a school liaison programme activities include Industry Days, Business Enterprise Days, Newspaper and Education Days, Mock Interview Days, Number Games and Mentoring. Bank staff, in a partnership with Connexions, have supported 17 young adults, 10 are now employed, 3 are in further education and 4 have a clearer vision of their future.

Co-operation among Co-operatives

Concern for Community A co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank. Co-operative banks are often created by persons belonging to the same local or professional community or sharing a common interest. Co-operative banks generally provide their members with a wide range of banking and financial services (loans, deposits, banking accounts...). Co-operative banks differ from stockholder banks by their organization, their goals, their values and their governance. In most countries, they are supervised and controlled by banking authorities and have to respect prudential banking regulations, which put them at a level playing field with stockholder banks. Depending on countries, this control and supervision can be implemented directly by state entities or delegated to a co-operative federation or central body. Even if their organizational rules can vary according to their respective national legislations,
features of co operative bank:-

1. Customer's owned entities : in a co-operative bank, the needs of the customers meet the needs of the owners, as co-operative bank members are both. As a consequence, the first aim of a co-operative bank is not to maximise profit but to provide the best possible products and services to its members. Some co-operative banks only operate with their members but most of them also admit non-member clients to benefit from their banking and financial services. 2. Democratic member control : co-operative banks are owned and controlled by their members, who democratically elect the board of directors. Members usually have equal voting rights, according to the co-operative principle of "one person, one vote".

3. Profil allocation : in a co-operative bank, a significant part of the yearly profit, benefits or surplus is usually allocated to constitute reserves. A part of this profit can also be distributed to the co-operative members, with legal or statutory limitations in most cases. Profit is usually allocated to members either through a patronage dividend, which is related to the use of the co-operative's products and services by each member, or through an interest or a dividend, which is related to the number of shares subscribed by each member.

Co-operative banks are deeply rooted inside local areas and communities. They are involved in local development and contribute to the sustainable development of their communities, as their members and management board usually belong to the communities in which they exercise their activities. By increasing banking access in areas or markets where other banks are less present - SMEs, farmers in rural areas, middle or low income households in urban areas co-operative banks reduce banking exclusion and foster the economic ability of millions of people. They play an influential role on the economic growth in the countries in which they work in and increase the efficiency of the international financial system. Their specific form of enterprise, relying on the above-mentioned principles of organization, has proven successful both in developed and developing countries. Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world. Cooperative banking, as discussed here, includes retail banking carried out by credit unions, mutual savings banks, building societies and cooperatives, as well as commercial banking services provided by mutual organizations (such as cooperative federations) to cooperative businesses.

A co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank. Co-operative banks are often created by persons belonging to the same local or professional community or sharing a common interest. Co-operative banks generally provide their members with a wide range of banking and financial services (loans, deposits, banking accounts ). Co-operative banks differ from stockholder banks by their organization, their goals, their values and their governance. In most countries, they are supervised and controlled by banking authorities and have to respect prudential banking regulations, which put them at a level playing field with stockholder banks. Depending on countries, this control and supervisioncan be implemented directly by state entities or delegated to a co-operative federation or central body.

Types co-operative banks:-








Categories There are two main categories of the co-operative banks.  Short term lending oriented co-operative Banks - within this category there are three sub categories of banks viz state co-operative banks, District cooperative banks and Primary Agricultural co-operative societies.  Long term lending oriented co-operative Banks - within the second category there are state co-operatives and rural development banks. The co-operative banking structure in India is divided into following main 5 categories: banks do not accept deposits from the general public
1) Primary Urban Co-op Banks

2) Primary Agricultural Credit Societies:

The Primary Co-operative Credit Society is an association of borrowers and non-borrowers residing in a particular locality. The funds of the society are derived from the share capital and deposits of members and loans from central co-operative banks.

The borrowing powers of the members as well as of the society are fixed. The loans are given to members for the purchase of cattle, fodder, fertilizers, pesticides, implements, etc.
3) District Central Co-op Banks:

These are the federations of primary credit societies in a district and are of two types those having a membership of primary societies only and those having a membership of societies as well as individuals. The funds of the bank consists of share capital, deposits, loans and overdrafts from state cooperative banks and joint stocks. These banks finance member societies within the limits of the borrowing capacity of societies. They also conduct all the business of a joint stock bank.
4) State Co-operative Banks:

The state co-operative bank is a federation of central co-operative bank and acts as a watchdog of the co-operative banking structure in the state. Its funds are obtained from share capital, deposits, loans and overdrafts from the Reserve Bank of India. The state co-operative banks lend money to central co-operative banks and primary societies and not directly to farmers.
5) Land Development Banks:

The land development banks are organised in 3 tiers namely, state, central and primary level and they meet the long term credit requirements of the farmers for developmental purposes. The state land development bank overseas the primary land development banks situated in the districts and tehsils in the state. They are governed both by the state government and Reserve Bank of India. Recently, the supervision of land development banks has been assumed by National Bank for Agriculture and Rural Development (NABARD). The sources of funds for these banks are the debentures subscribed by both central and state government.

Cooperation is a form of organizat ion in which persons the bonds of moral so lidarit ybetween them, voluntarily associate and come together on the basis of equalit y for thep r o m o t i o n o f t h e i r e c o n o m i c i n t e r e s t s . T h o s e w h o c o m e t o g e t h e r h a v e a c o m m o n economic aim which they cannot achieve by individual isolated act ion because of the weakness of economic posit ion of a large majorit y of them. This element of individual w e a k n e s s c a n b e o ve r c o m e b y p o o l i n g t h e i r r e s o u r c e s b y m a k i n g s e l f h e l p e f f e c t i v e through mutual aid and by strengthening

Objectives of the co-operative banks The co-operative system world over has emerged wit h a dist inct object ive namely to safeguard the interests of its members and to provide financial assistance to those who areunable to get financial help from other institutions. Still a large number of people in the urban, semi urban and villages are unable to receive the benefits. They have not benefited fr o m t h e n e w d e v e l o p m e nt s t o a d e s i r e d e xt e nt . T he c o - o p e r a t i v e s c a n p l a y a ve r y significant role in the tradit ional areas like small borrowers; retail and petty traders transport operators and other weaker sections of the society. Primary urban co-operative banks play an important role in meet ing the growing credit needs of urban and semiurban areas. UCBs mobilize savings from the middle and lower income groups and purvey credit to small sections of the society. The basic idea of establishing the co-operative bank is st ill relevant but they have to change their working style and adopt modern means of ICT. Hence it would be useful to discuss in brief the basic philosophy behind establishing the cooperative inst itutions. Today there are over 2000 primary urban cooperative banks wit h a deposit of over Rs60000 crores. Early history of cooperative movement through out the world shows that cooperative organizations began with consumers cooperatives. The first Co-operative society known as Rochdale Pioneer was formed by 28 flannel weavers in England in 1843 to protect themselves against the organized sector. The movement later spread on to the other fields of economic activities. But the ultimate aim of co-operatives was the protection of poor sections of the society by pooling the available sources with them to help their members by providing financial assistance to face the competition from the organized sector.

Commericial Banks vs. Cooperative Banks


Scheduled banks in India fall into two categories: commercial banks and cooperative banks. Commercial banks constitute those banks driven by profit. These banks exist for no other reason than generating capital. Cooperative banks technically constitute cooperative institutions with an elected managing committee, provisions for the protection of members' rights and a set of communally developed and approved bylaws and amendments. In addition to personal finance, co-op banks exist to handle the finances of rural activities like agricultural and livestock farms and urban activities like entrepreneurship and home buying.

Indias central bank is the Reserve Bank of India (RBI). Reserve Bank of India monitors, formulates and implements Indias monetary policy. Established in the year 1935, Reserve bank of India was nationalized in the year 1949. Owned fully by the Government of India, Reserve Bank has are 22 regional offices in various state capitals of India with its headquarters located in Mumbai. It has a majority stake in the State Bank of India. Functions of the Reserve Bank of India 1. The financial system is regulated and supervised by the Reserve Bank of India. 2. The guidelines according to which the banking operations within which the countrys banking and financial system functions are defined by the RBI. By monitoring the functioning of other banks, it tries to protect depositors interests and provides costeffective banking services to the public. If a customer has a problem and the bank does not solve the customers problem, Reserve bank of India can approach them through the Banking Ombudsman Service. 3. RBI regulates the foreign exchange inflow and outflow, by theForeign Exchange Management Act, 1999 of RBI. All money transfer out of India, is subject to limits defined by the RBI. The money transfer could be either for personal or for trade purposes. 4. Currency notes and coins of various denominations are issued by The Reserve Bank of India. It destroys damaged currency notes not fit for circulation and also issues and exchanges coins. To prevent circulation of fake currency, the design of the currency is periodically modified.

5. RBI is the banker to the Government of India. Merchant banking function for the central and the state governments are performed by the RBI. Reserve bank of India is the banker to all Government departments of India. For example, in Mumbai, the tax refunds drawn on the Reserve bank of India are issued by the Income tax department. 6. All major banks bank with the RBI. Banking accounts of all scheduled banks in India is maintained by the RBI. RBI provides insurance on deposits for up to Rs 1 lakh in scheduled banks. If cash withdrawn from scheduled banks, cash withdrawal tax is applicable. Smaller co-operative banks do not usually fall under the category of scheduled banks. According to the RBI lending rates, the bank interest rates increase or decrease. 7. The gold trade is also regulated by the Reserve Bank of India. In India. Currently 17 Indian banks are involved in the trade of gold. In order to curb illegal trade in gold and increase competition in the market, applications have been invited by the RBI from more banks for direct import of gold. 8. Know your customer guidelines (KYC) has been issued by the RBI for non-banking finance companies (NBFC ) in March 2006. Customer whose outstanding credit is more than Rs 1 lakh or deposit balance with the NBFC is less than Rs 50,000 need not provide all the documents to the bank. The customers will be categorized as low risk, medium risk and high risk. One of the largest NBFC in India is Sahara India. 9. To maintain the exchange rate of Indian Rupee versus foreign currencies like the US Dollar, Euro, Pound sterling, and Japanese yen, RBI buys and sells foreign currencies. Their website provides the trends in exchange rate values for these currencies. 10. RBI sets the maximum interest rate Indian banks can offer on NRI dollar deposits depending on the liquidity in the money markets. Banks can offer an interest rate equal to the London Interbank Offered Rate (LIBOR) from March 2006 onwards. LIBOR is an international benchmark rate on dollar deposits. 11. Percentage of deposits that banks in India should keep with RBI is known as the Cash Reserve Ratio (CRR). The CRR which is currently 5%, also depends on the liquidity in the money markets. The rate at which RBI absorbs funds from banks is the Reverse Repo Rate.

12. The opening /installation of ATM (Automatic Teller Machines) is also regulated by the RBI. It is trying to increase the density of the ATMs in rural areas. The RBI supplies fresh currency notes for ATMs. 13. Transactions related to cheques, drafts and pay orders are settled in clearing houses. There are about 1050 clearing house out of which 567 clearing houses are managed by the The State Bank of India, mainly in the smaller cities and towns. 14. In April of every year the annual monetary policy is announced. 15. Banks like ICICI bank charge Rs 100 for clearing an outstation cheque from metro cities (Mumbai, Delhi, Chennai, Kolkatta), but it costs banks only 50 paisa for clearing through the RBI clearing system. Even though RBI has asked banks to display the service charges on their website, only 5 banks have complied so far. 16. The opening of branches by banks are regulated by RBI and ensures that they follow the Know Your Customer guidelines. RBI is Bankers Bank The Reserve Bank of India acts as the bankers bank. Every scheduled bank was required to maintain with the Reserve Bank a cash balance equivalent to 5% of its demand liabilities and 2% of its time liabilities in India, according to the provisions of the Banking Companies Act of 1949. The distinction between demand and time liabilities was abolished by an amendment of 1962, and cash reserves equal to 3% of their aggregate deposit liabilities have to be kept by the banks as has been asked for by the RBI. The Reserve Bank of India can change the minimum cash requirements of other banks. On the basis of eligible securities the scheduled banks can borrow money from the Reserve Bank of India. At times of need or stringency by re-discounting bills of exchange, the banks can get financial accommodation from the RBI. Reserve Bank becomes not only the bankers bank but also the lender of the last resort since in times of banking crisis the Reserve Bank of India is expected to come to the help of commercial banks. RBI is Controller of Credit

The Reserve Bank of India has the power to influence the volume of credit created by banks in India which means that it is the controller of credit. This is being done through open market operation or by changing the Bank rate. Reserve Bank of India can ask any particular bank or the whole banking system not to lend financial support to a particular groups or persons on the basis of certain types of securities according to the Banking Regulation Act of 1949. Selective controls of credit are increasingly being used by the Reserve Bank since 1956. Indian money market is controlled by the many more powers of the Reserve Bank of India. A license from the Reserve Bank of India to do banking business within India has to be obtained by every bank. On stipulated conditions not being fulfilled, the RBI has powers to cancel the licenses also. Before a new branch of any bank be opened. it has to get the permission of the Reserve Bank. A weekly return showing in detail its assets and liabilities must be sent to the Reserve Bank by every scheduled bank. This power of the RBI to call for information is also intended to give it effective control of the credit system. Another power of the Reserve Bank is the power to inspect the accounts of any commercial bank. Reserve Bank of India, as the supreme banking authority in the country, therefore, has the following powers: a) The cash reserves of all the scheduled banks are in the hands of the RBI. b) Through quantitative and qualitative operations, it controls the credit operations of other banks. c) Through the system of licensing, inspection and calling for information, the RBI controls the banking system in the country. d) By providing rediscount facilities to scheduled banks, it acts as the lender of the last resort to other banks. By all these methods RBI controls the whole financial system of India.

Issues relating to finance (Rural structure) The poor recovery of outstanding credit by the rural cooperative banks makes the whole system unsustainable. Lack of standardised business model and risk management systems Over exposure to the agri sector and lack of diversification of the loan portfolios. For the LT structure, the loan portfolio consists of a single product - long

terms agri loan of > 5 years term.