Maharashtra Board Class 12 Cooperation Chapter 8 Maharashtra State Co operative Bank PDF Download

8. Maharashtra State Co-operative Bank

8.1 Introduction

India is an agricultural country. The business of agriculture is seasonal in nature. Agriculture sector needs finance for particular period. The structure of Credit Co-operative is of three-tier in Maharashtra. Primary Credit Co-operative Society works at village level, District Central Cooperative Bank works at district level and State Co-operative bank (Apex bank) acts as the federation of all District Central Co-operative Bank and works at State Level.

Maharashtra State Co-operative Bank is the apex bank in Maharashtra state. In this three-tier structure, State Co-operative Bank works at the top most level and hence it is known as the Apex Bank. In 1914 the Maclagan committee had recommended the need of establishment of State co-operative bank. State Co-operative Bank were established to fulfil the loan requirements of primary credit co-operative societies through central co-operative banks and to supervise, control and coordinate their work.

State co-operative bank is the union of all District central co-operative Banks in the state. The State co-operative bank was established on 11th October, 1911 at Mumbai province. For every state there is one apex bank. The head office of Maharashtra State co-operative bank is at Mumbai. State co-operative bank provides loan indirectly to the farmers through District central Co-operative Bank and Primary credit co-operatives.

Teacher's Note

State co-operative banks help farmers get money for farming. Like your parents go to a bank to get money for business, farmers also borrow from these banks.

Exam Trick

Remember: Apex = TOP. State co-operative bank is the top bank. It controls all other banks below it. Just like your school principal is the top boss in school.

Points to Remember

State co-operative bank is the highest bank in the state.
It was established in 1911 in Mumbai.
It gives loans to District central co-operative banks.
It helps farmers get money for farming indirectly.
It is also called Apex bank.

8.2 Meaning and Definition

Meaning:

The top most co-operative bank of the State which brings about overall and well-balanced development on the agricultural front by extending credit to farmers on the basis of co-operation is known as State co-operative bank. Its primary objective is to facilitate well-balanced development of the States co-operative movement. The bank which acts as the important link between States co-operative movement, Reserve Bank and NABARD is known as State Co-operative Bank.

The top most institution of the State which provides credit to States co-operative societies is known as State Co-operative Bank.

Definition:

State Co-operative Bank is known as the apex bank of the State which provides credit supply for developing the State co-operative movement. The top most institution which is entrusted with the task of collection of capital and allocating the funds to different sectors as per requirement so as to eradicate backwardness, promote development and bring about well-balanced development on the co-operative sector of the entire State is known as State Co-operative Bank.

Apex Bank refers to that institution whose range of operations is spread over entire State of Maharashtra and its main objective is to protect the main objectives of those institutions who are its members, take care of their amenities and providing them the required services. This institution is also categorized by the Registrar.

Teacher's Note

Apex means the top or highest point. Like the apex of a triangle is the top point. This bank is the top bank of the state that helps all other banks.

Exam Trick

Remember: Apex = Highest. State co-operative bank is the highest level bank. NABARD is above it for the whole country, but in the state, this bank is at the top.

Points to Remember

State co-operative bank provides credit to all co-operative societies.
It helps develop farming in the state.
It works as a link between the government and co-operative banks.
It collects money and gives it to different sectors.
It is the most important bank in the state's co-operative system.

8.3 Functions of State Co-operative Bank

State Co-operative Bank functions as the apex bank of all the co-operative banks in the State. Being the bank of all District Central Co-operative Banks, State Co-operative Bank performs following functions:

1. Acceptance of deposits: State Co-operative Bank accepts deposits from its members among District central co-operative banks, individual members as well as co-operative societies. The bank also accepts deposits from Zilla Parishad, educational institutions, municipal council, etc. The State co-operative banks accept deposit on large scale and fulfils the requirement of working capital of District Central co-operative banks.

2. Granting loans to co-operative societies: The State co-operative banks are required to provide loans on a large scale to District Central co-operative banks and other co-operative societies in the state. State co-operative bank also provide loan to processing co-operatives, marketing co-operatives, housing co-operatives, industrial co-operatives, etc. The loans is also provided indirectly to the farmers through primary co-operative credit societies.

3. Supervision on use of loans: The state co-operative bank keeps supervision on use of loan provided to the District central co-operative bank, processing co-operative societies and Cooperative industrial societies in the state. After providing loans to co-operative institutions, to avoid misuse of loan and to have a control on the problem of heavy overdues, the State Co-operative Bank gives instructions to them. And if the need arises, then the apex bank undertakes inspection of the member co-operative societies through experts.

4. Co-ordinates the working of co-operative institutions: In the State, there are various types of co-operative institutions like Credit co-operative societies, co-operative banks, consumers co-operative societies, etc. For the development of co-operative movement, there should be coordination among these societies. State co-operative banks has to prepare guiding principles for co-operative institutions and to see that it is observe from them. Also, it has to prepare policy frame work for co-operative institutions and has to ensure that it is followed by them.

5. Connect the co-operative sector with money market: Primary credit co-operative societies are working in villages and hence they don't come in contact with the money market. State cooperative bank invests the reserve and surplus funds of District central co-operative banks and other primary credit societies in the money market. The institutions involved in various types of short term and mid-term financial transactions is collectively known as the Money market. The co-operative sector and money market come in contact with each other only through State Co-operative Bank. State Co-operative Bank buys debentures and invests in government schemes. During the times of scarcity of funds, it procures short term loans from the money market and distributes the same to District Central co-operative banks. The State Co-operative bank encashes bills generated through agricultural transactions in the money market. The State co-operative bank establish contact of credit co-operative society with money market.

6. Providing banking services: Co-operative banks are spread all over the state. The State co-operative banks through its network of branches provides various types of banking services to its customers and co-operative societies. The services include clearing the cheque and bills of exchange of co-operative banks, transfer of funds from one branch to the other branch, drawing drafts etc. The State co-operative bank also provides services such as ATM, Net banking, Tele banking, RTGS and NEFT.

7. Providing loans to rural industries: The State co-operative banks undertakes the task of providing loans for industrialization in rural areas. The development of agriculture leads to rural development. State co-operative banks provides loans to co-operative sugar factories, co-operative spinning mills, agricultural produce processing units, handloom industries and such other co-operative industries. With the objective of bringing about co-operative development of cottage industries and small scale industries in rural areas, State co-operative banks plays a major role by buying their share capital to assist them to operate in the initial stages. State co-operative banks performs the task of maintaining balance in the overall development of rural areas.

8. Maintaining balance in credit supply: The financial position of all District Central Co-operative Banks in the State is not the same. The amount of share capital and deposits also differ. In certain District Central Co-operative Bank, the demand for loan is low as compared to their share capital and deposits. Where as in other District Central Co-operative Banks, the demand for loans is higher for agriculture especially during the harvesting season. The funds of those District Central Co-operative Banks who are in surplus are diverted to those District Central Co-operative Banks which are in deficit of funds. Similarly, State co-operative banks also diverts the flow of funds to those industries where the demand is higher so as to maintain balance in supply of loans.

9. Expansion of branches: The head office of Maharashtra State Co-operative Bank is in Mumbai. The Regional offices and branches of the bank have been opened in various parts of the State. Banking services are being provided through these branches of the bank. The bank performs the function of distribution and recovery of the loans.

10. Provides leadership for co-operative movement: Reserve Bank of India functions as the bank of Government of India similarly State Co-operative Bank functions as the bank of the State Government. The implementation of financial policy of Government, provides suitable directions for the development of co-operative sector in the State and provides suggestions to the State Government for preparing policies relating to development of the State.

Teacher's Note

State co-operative bank does many jobs like a big manager. It collects money from many people and gives loans to farmers and villages. Just like a principal manages a big school.

Exam Trick

Remember the 10 functions as 5 pairs: Deposits and Loans, Supervision and Coordination, Money Market and Banking, Rural Industries and Balance, Branches and Leadership. This makes it easier to remember.

Points to Remember

It accepts deposits from many people and banks.
It gives loans to District co-operative banks and farmers.
It checks how loans are being used.
It connects villages with the money market in cities.
It helps small industries in villages grow.

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