History of Urban Cooperative Banks in India
The
term Urban Co-operative Banks (UCBs), though not
formally defined, refers to primary cooperative banks located
in urban and semi-urban areas. These banks, till 1996, were
allowed to lend money only for non-agricultural
purposes. This distinction does not hold today. These
banks were traditionally centred around communities, localities
work place groups. They essentially lent to small
borrowers and businesses. Today, their scope of operations
has widened considerably.
The origins of
the urban cooperative banking movement in India can be
traced to the close of nineteenth century when,
inspired by the success of the experiments
related to the cooperative movement in Britain and
the cooperative credit movement in Germany such societies were set up in India. Cooperative societies are based on the principles of cooperation, - mutual help, democratic decision making and open membership. Cooperatives
represented a new and alternative approach to
organisaton as against proprietary firms, partnership
firms and joint stock companies which represent the dominant form of commercial organisation.
The Beginnings
The
first known mutual aid society in India was probably
the ‘Anyonya Sahakari Mandali’ organised in the
erstwhile princely State of Baroda in 1889 under the guidance
of Vithal Laxman also known as Bhausaheb Kavthekar. Urban
co-operative credit societies, in their formative phase
came to be organised on a community basis to meet the
consumption oriented credit needs of their members.
Salary earners’ societies inculcating habits of thrift and self help
played a significant role in popularising the
movement, especially amongst the middle class as well as organized
labour. From its origins then to today, the thrust of
UCBs, historically, has been to mobilise savings from
the middle and low income urban groups and purvey
credit to their members - many of which belonged to
weaker sections.
The enactment of Cooperative Credit Societies
Act, 1904, however, gave the real impetus to the
movement. The first urban cooperative credit society
was registered in Canjeevaram (Kanjivaram) in the
erstwhile Madras province in October, 1904. Amongst
the prominent credit societies were the Pioneer Urban
in Bombay (November 11, 1905), the No.1 Military Accounts Mutual
Help Co-operative Credit Society in Poona (January 9, 1906).
Cosmos in Poona (January 18, 1906), Gokak Urban
(February 15, 1906) and Belgaum Pioneer (February 23,
1906) in the Belgaum district, the Kanakavli-Math
Co-operative Credit Society and the Varavade Weavers’
Urban Credit Society (March 13, 1906) in the South Ratnagiri (now
Sindhudurg) district. The most prominent amongst the early
credit societies was the Bombay Urban Co-operative
Credit Society, sponsored by Vithaldas Thackersey and
Lallubhai Samaldas established on January 23, 1906..
The Cooperative Credit Societies
Act, 1904 was amended in 1912, with a view to broad
basing it to enable organisation of non-credit societies.
The Maclagan Committee of 1915 was appointed to
review their performance and suggest measures for strengthening
them. The committee observed that such institutions were
eminently suited to cater to the needs of the lower and
middle income strata of society and would inculcate
the principles of banking amongst the middle classes.
The committee also felt that the urban cooperative
credit movement was more viable than agricultural credit societies.
The recommendations of the Committee went a long way in
establishing the urban cooperative credit movement in
its own right.
In the present day context, it is
of interest to recall that during the banking crisis
of 1913-14, when no fewer than 57 joint stock banks
collapsed, there was a there was a flight of deposits
from joint stock banks to cooperative urban banks.
Maclagan Committee chronicled this event thus:
“As
a matter of fact, the crisis had a contrary effect,
and in most provinces, there was a movement to withdraw
deposits from non-cooperatives and place them in cooperative institutions, the distinction between two classes of security
being well appreciated and a preference being given
to the latter owing partly to the local character and
publicity of cooperative institutions but mainly, we think, to the connection of Government with Cooperative movement”.
Under State Purview
The
constitutional reforms which led to the passing of
the Government of India Act in 1919 transferred the subject
of “Cooperation” from Government of India to the Provincial
Governments. The Government of Bombay passed the first
State Cooperative Societies Act in 1925 “which not
only gave the movement its size and shape but was a
pace setter of cooperative activities and stressed the
basic concept of thrift, self help and mutual aid.”
Other States followed. This marked the beginning of
the second phase in the history of Cooperative Credit Institutions.
There
was the general realization that urban banks have an
important role to play in economic construction. This
was asserted by a host of committees. The Indian Central Banking
Enquiry Committee (1931) felt that urban banks have a duty
to help the small business and middle class people. The Mehta-Bhansali Committee (1939), recommended that those societies
which had fulfilled the criteria of banking should be
allowed to work as banks and recommended an
Association for these banks. The Co-operative Planning
Committee (1946) went on record to say that urban banks have been
the best agencies for small people in whom Joint
stock banks are not generally interested. The Rural
Banking Enquiry Committee (1950), impressed by the low
cost of establishment and operations recommended the
establishment of such banks even in places smaller
than taluka towns.
The first study of Urban
Co-operative Banks was taken up by RBI in the year
1958-59. The Report published in 1961 acknowledged the
widespread and financially sound framework of urban
co-operative banks; emphasized the need to establish primary
urban cooperative banks in new centers and suggested that State
Governments lend active support to their development.
In 1963, Varde Committee recommended that such banks
should be organised at all Urban Centres with a
population of 1 lakh or more and not by any single
community or caste. The committee introduced the
concept of minimum capital requirement and the criteria of population
for defining the urban centre where UCBs were
incorporated.
Duality of Control
However,
concerns regarding the professionalism of urban
cooperative banks gave rise to the view that they should
be better regulated. Large cooperative banks with paid-up share
capital and reserves of Rs.1 lakh were brought under the
perview of the Banking Regulation Act 1949 with effect
from 1st March, 1966 and within the ambit of the
Reserve Bank’s supervision. This marked the beginning
of an era of duality of control over these banks.
Banking related functions (viz. licensing,
area of operations, interest rates etc.) were to be
governed by RBI and registration, management, audit
and liquidation, etc. governed by State Governments as
per the provisions of respective State Acts. In 1968,
UCBS were extended the benefits of Deposit Insurance.
Towards
the late 1960s there was much debate regarding the
promotion of the small scale industries. UCBs came to be seen
as important players in this context. The Working Group on
Industrial Financing through Co-operative Banks, (1968
known as Damry Group) attempted to broaden the scope
of activities of urban co-operative banks by
recommending that these banks should finance the small
and cottage industries. This was reiterated by the Banking Commisssion
(1969).
The Madhavdas
Committee (1979) evaluated the role played by urban
co-operative banks in greater details and drew a
roadmap for their future role recommending support from RBI
and Government in the establishment of such banks in backward
areas and prescribing viability standards.
The
Hate Working Group (1981) desired better utilisation
of banks' surplus funds and that the percentage of the Cash Reserve
Ratio (CRR) & the Statutory Liquidity Ratio (SLR) of
these banks should be brought at par with commercial
banks, in a phased manner. While the Marathe Committee
(1992) redefined the viability norms and ushered in
the era of liberalization, the Madhava Rao Committee
(1999) focused on consolidation, control of sickness,
better professional standards in urban co-operative banks and
sought to align the urban banking movement with commercial
banks.
A feature of the urban banking movement
has been its heterogeneous character and its uneven
geographical spread with most banks concentrated in
the states of Gujarat, Karnataka, Maharashtra, and
Tamil Nadu. While most banks are unit banks without
any branch network, some of the large banks have established their
presence in many states when at their behest multi-state
banking was allowed in 1985. Some of these banks are
also Authorised Dealers in Foreign Exchange.
Recent Developments
Over
the years, primary (urban) cooperative banks have
registered a significant growth in number, size and volume
of business handled. As on 31st March, 2003 there were 2,104 UCBs
of which 56 were scheduled banks. About 79 percent of
these are located in five states, - Andhra Pradesh,
Gujarat, Karnataka, Maharashtra and Tamil Nadu.
Recently the problems faced by a few large UCBs have
highlighted some of the difficulties these banks face
and policy endeavours are geared to consolidating and strengthening
this sector and improving governance.
1.Ahmedabad Mercantile Co-Op Bank Ltd.
2 Kalupur Commercial Coop.Bank Ltd.
3 Madhavpura Mercantile Co-Op Bank Ltd.
4 Mehsana Urban Co-Op Bank Ltd.
5 Nutan Nagarik Sahakari Bank Ltd.,
6 Rajkot Nagrik Sahakari Bank Ltd.
7 Sardar Bhiladwala Pardi Peoples Coop Bank Ltd.
8 Surat Peoples Coop Bank Ltd.
9 Amanath Co-operative Bank Ltd.
10 Andhra Pradesh Mahesh Co-Op Urban Bank Ltd.
11 Charminar Co-operative Urban Bank Ltd.
12 Vasavi Coop Urban Bank LImited.
13 Indian Mercantile Co-operative Bank Ltd.,
14 Abhyudaya Co-operative Bank Ltd.,
15 Bassein Catholic Co-operative Bank Ltd.
16 Bharat Co-operative Bank (Mumbai) Ltd.
17 Bharati Sahakari Bank Limited.
18 Bombay Mercantile Co-operative Bank Limited
19 Citizen Credit Co-operative Bank Ltd.,
20 Cosmos Co-operative Urban Bank Ltd.
21 Dombivli Nagari Sahakari Bank Ltd.
22 Goa Urban Co-operative Bank Limited.
23 Gopinath Patil Parsik Janata Sahakari Bank Ltd.,
24 Greater Bombay Co-operative Bank Limited
25 Jalgaon Janata Sahakari Bank Ltd.
26 Janakalyan Sahakari Bank Ltd.,
27 Janalaxmi Co-operative Bank Ltd.,
28 Janata Sahakari Bank Ltd.,
29 Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd.
30 Kalyan Janata Sahakari Bank Ltd.,
31 Karad Urban Co-operative Bank Ltd.
32 Mahanagar Co-operative Bank Ltd.,
33 Mapusa Urban Co-operative Bank of Goa Ltd.,
34 Nagar Urban Co-operative Bank Ltd.,
35 Nasik Merchant’s Co-operative Bank Ltd.
36 New India Co-operative Bank Ltd.,
37 NKGSB Co-operative Bank Ltd.,
38 Pravara Sahakari Bank Ltd.
39 Punjab & Maharashtra Co-operative Bank Ltd.
40 Rupee Co-operative Bank Ltd.
41 Sangli Urban Co-operative Bank Ltd.,
42 Saraswat Co-operative Bank Ltd.,
43 Shamrao Vithal Co-operative Bank Ltd.
44 Solapur Janata Sahakari Bank Ltd.
45 Thane Bharat Sahakari Bank Ltd.
46 Thane Janata Sahakari Bank Ltd.
47 The Kapol Co-operative Bank Ltd.,
48 Zoroastrian Co-operative Bank Ltd.,
49 Nagpur Nagrik Sahakari Bank Ltd.
50 Shikshak Sahakari Bank Ltd.,
51 The Akola Janata Commercial Co-operative Bank Ltd.,
52 The Akola Urban Co-operative Bank Ltd.,
53 The Khamgaon Urban Co-operative Bank Ltd.,
Note: There are 1592 Non-Scheduled Urban Co-Operative Banks in India as in end of March 2011.
State Co-operative Banks (31)
1.The Andaman and Nicobar State Co-operative Bank Ltd.
2. The Andhra Pradesh State Co-operative Bank Ltd.
3. The Arunachal Pradesh State co-operative Apex Bank Ltd.
4. The Assam Co-operative Apex Bank Ltd.
5. The Bihar State Co-operative Bank Ltd.
6. The Chandigarh State Co-operative Bank Ltd.
7. The Delhi State Co-operative Bank Ltd.
8. The Goa State Co-operative Bank Ltd.
9. The Gujarat State Co-operative Bank Ltd.
10. The Haryana State Co-opertive Apex Bank Ltd.
11. The Himachal Pradesh State Co-operative Bank Ltd.
12. The Jammu and Kashmir State Co-operative Bank Ltd.
13. The Karnataka State Co-operative Apex Bank Ltd.
14. The Kerala State Co-operative Bank Ltd.
15. The Madhya Pradesh Rajya Sahakari Bank Maryadit
16. The Maharashtra State Co-operative Bank Ltd.
17. The Manipur State Co-operative Bank Ltd.
18. The Meghalaya Co-operative Apex Bank Ltd.
19. The Mizoram Co-operative Apex Bank Ltd.
20. The Nagaland State Co-operative Bank Ltd.
21. The Orissa State Co-operative Bank Ltd.
22. The Pondichery State Co-opertive Bank Ltd.
23. The Punjab State Co-operative Bank Ltd.
24. The Rajasthan State Co-operative Bank Ltd.
25. The Sikkim State Co-operative Bank Ltd.
26. The Tamil Nadu State Apex Co-operative Bank Ltd.
27. The Tripura State Co-operative Bank Ltd.
28. The Uttar Pradesh Co-operative Bank Ltd.
29. The West Bengal State Co-operative Bank Ltd.
30. The Chhattisgarh RajyaSahakari Bank Maryadit
31. The Uttaranchal Rajya Sahakari Bank Ltd.
