Maharashtra Board Class 12 Cooperation Chapter 6 Urban Co operative Bank PDF Download

Urban Co-operative Bank

6.1 Introduction

The Co-operative movement was started in India to improve the economic condition of poor people. The need was felt to start such institution to help the poor and middle-class people in urban and semi urban areas.

In India there is three-tier system of co-operative banking. At State level State Co-operative Bank, at District level District Central Co-operative Bank and at Village level Primary / Credit Co-operative Society.

The Urban co-operative bank was established to fulfill financial needs of urban peoples like labourers, artisans, small trader, craftsmen, salary earners, etc. To relieve them from the clutches of moneylenders, to provide personal loans and to increase the habit of saving and thrift such bank were established.

Urban co-operative banks are established in urban and semi-urban areas.

In India the first co-operative bank (credit society) was established in the princely State of Baroda on 5th February, 1889 under the guidance of Vithal Laxman Kavthekar also known as Bhausaheb Kavthekar. The name of this co-operative bank was 'Anyonya Sahayakari Mandali Co-operative Bank Limited'. These co-operative banks were accepting deposits, providing loan and banking services.

Teacher's Note

Urban co-operative banks help poor people in cities like Mumbai and Delhi get small loans. They are like helpers for common people who cannot get loans from big banks.

Exam Trick

Remember: Urban = City areas. Co-operative = People working together. So Urban co-operative bank = A bank in cities where people help each other get loans.

Points to Remember

Urban co-operative banks work only in cities and towns.
They give loans to small traders, workers, and salary earners.
The first urban co-operative bank started in Baroda in 1889.
These banks accept deposits and give loans to members.
They help poor people who cannot get loans from big banks.

6.2 Meaning and Definition of Urban Co-operative Bank

Meaning

The working area is restricted up to certain urban area and collect savings deposits as well as lend loan for different purposes and established to perform the banking functions is called as Urban co-operative Bank. The bank which is established to provide banking services and loan to the urban people like labourers, artisans, small trader, craftsmen, salary earners, etc. is called Urban co-operative bank.

The bank established on co-operative principles to provide loan in urban and semi-urban areas is known as Urban co-operative bank.

Definition

Banking Regulation Act 1949: 'Those share capital and reserve fund is more than Rs.100000/- and perform general banking functions and not offer membership to any co-operative society is known as Primary credit co-operative society or Urban co-operative Bank.'

Banking Regulation Act 1949 was applicable to Urban Co-operative Banks from 1966 and accordingly. The salary earners, small traders, merchants, middle class people, artisans, etc. are the members of Urban co-operative Banks. The membership of Urban co-operative bank is open to all the people residing in the working area of the bank. Urban co-operative banks are the members of District Central Co-operative bank.

Teacher's Note

Urban co-operative banks are banks in cities that help salary earners like teachers and office workers. They give small loans for houses and education just like a local bank in your city does.

Exam Trick

Remember: Banking Regulation Act was applied in 1966. Think of it as the year the government made rules for these banks - 1966 is the magic year!

Points to Remember

Urban co-operative banks work in cities only.
They give loans to workers, traders, and small business people.
Share capital must be more than Rs.100000/-.
All people in the area can become members.
These banks follow Banking Regulation Act 1949 from 1966.

6.3 Function of Urban Co-operative Bank

The Urban co-operative bank is established with an objective to fulfill financial need to urban and semi-urban areas. The urban co-operative bank has created important place in the mind of urban peoples. Due to easy operation and quick fulfillment of members and non-members need these banks have become popular in urban areas. Following are the functions of Urban co-operative bank:

1. Accepting Deposits
2. Granting Loan
3. To act as an Agent
4. Discounting bill of exchange
5. To provide Safe Deposit Locker
6. Modern banking services
7. Helping for self-employment
8. Quick banking services
9. Financial management
10. Training to staff and officers

1. Accepting Deposits

The main functions of Urban co-operative bank are accepting deposits from public. The deposits are collected from members and non-members of urban and semi-urban areas. This bank accepts deposits in the form of Saving deposit, Current deposit, Fixed deposit and Recurring deposit, Pygmy deposits, etc.

2. Granting Loan

Urban co-operative banks provide short-term and medium-term loan to the members and non-members against security. The loan is provided to the businessmen, merchants, craftsmen, salary earners, etc. considering their needs. The loan is provided to the members for children education, housing, purchasing consumers product like television, refrigerator, computer, etc. Overdraft facility is also provided to the business on current account.

3. To Act As An Agent

Urban co-operative bank provides all banking functions. As an agent of accountholder, the bank makes payment of telephone bill, electric bill, LIC premium, children educational fees, house rent, housing loan installment, purchase and sale of shares and debentures, etc. for these functions nominal bank charges are charged by the bank. And also provides guidance to the members for proper investment.

4. Discounting Bill Of Exchange

When the credit transaction takes place between two parties, the creditor draws bill of exchange for a specific period which is accepted by debtor this bill of exchange is discounted by the bank for this interest is charged which is known as discount.

5. To Provide Safe Deposit Locker

Urban co-operative banks provide safe deposit lockers to its customers means depositors. The depositor can keep safely their valuables like gold and silver ornaments, important documents in such locker. This service or facility is provided by the bank for the safe custody of valuables of its customers. Bank charges rent, as per the size of lockers.

6. Modern Banking Services

Urban co-operative Banks also provides modern banking services likes 24 hours ATM services to the members. This service is provided by the ATM centers located nearby market, railway station, bus stand, etc. The bank also provides other modern banking services like Electronic money transfer, core banking, e-banking, mobile banking, Credit card, Debit card, etc. In Telebanking system a specific phone number is allotted to the members through which they can get all information regarding their accounts like transaction, balance of their account, current rate of interest, foreign exchange rate, etc.

7. Helping For Self-employment

Urban co-operative banks provide loan for self-employment in urban and semi-urban areas for the persons want to start their own business. Self-employed persons like work-shop owner, machinery repairer, tailor, weaver, truck transporter, auto rickshaw driver, etc. These persons get the financial help from Urban co-operative bank for self-employment which helps to solve the problem of unemployment.

8. Quick Banking Services

Due to globalization competition is increasing in all sector. The Urban co-operative society provides quick banking services as per the needs of the customers by charging reasonable charges. Members pay service charges to the bank. The bank maintains good relation with customers and provide quick services to the customers.

9. Financial Management

Urban co-operative bank makes proper investment of funds. The bank invests surplus fund as per the provisions and instructions of Reserve Bank of India. After taking into consideration the cash requirement security (safety) and return on investment.

10. Training To Staff And Officers

The Urban co-operative bank provide professional training to the staff, officers and employees of the bank. For this they arrange various workshops to improve the quality of banking services. The success of bank is dependent on the services provided by the bank.

Teacher's Note

Urban co-operative banks do many things like regular banks. They take deposits and give loans just like the bank near your house does for your parents.

Exam Trick

Remember: 10 main functions. Think: Deposits, Loans, Agent, Bills, Lockers, Modern, Self-help, Quick, Money management, Training. The first letter of each word helps you remember!

Points to Remember

Banks accept deposits from public in many forms.
They give loans to businessmen and workers.
Banks work as agents and pay bills for customers.
Safe deposit lockers keep valuable things safe.
Modern services like ATM work 24 hours.

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