State cooperative banks are the highest-level cooperative banks in each Indian state. They were established to raise funds and assist in proper distribution among sectors. They provide loans primarily to cooperative societies, which then lend to individual borrowers. State cooperative banks obtain capital from member cooperative societies, deposits, and borrowings. While they play an important role in rural financing, they also face problems like non-payment of loans leading to increased overdues.
2. TABLE OF CONTENT
• INTRODUCTION
•History of cooperative banking
•Structure of cooperative Banking
•FUNCTION OF SCBs
•Capital of SCBs
•Loans and Advances
•PROBLEMS FACED BY SCBs
3. INTRODUCTION
• State Cooperative Banks are the highest-level cooperative banks
in each of the states.
• The Maclagan Committee emphasized the importance of
establishing these banks.
• They raise funds and assist in their proper distribution among
various sectors. Individual borrowers receive funds from state
cooperative banks via central cooperative banks and primary
credit societies.
• All-State Apex Cooperative Banks in India have their own national
federation, the National Federation of State Cooperative Banks,
which was founded in 1967 in Mumbai.
4. History of cooperative banking:
• The history of Indian cooperative banking started with the passing
of Cooperative Societies Act in 1904
• The objective of this Act was to establish cooperative credit
societies “to encourage thrift, self-help and cooperation among
agriculturists, artisans and persons of limited means.”
• The Cooperative Societies Act, 1912 recognized the need for
establishing new organizations for supervision, auditing and supply
of cooperative credit. These organizations were- (a) A union,
consisting of primary societies (b) the central banks and (c)
provincial banks.
6. FUNCTION OF SCBs
• They provide a link through which the Reserve Bank of
India provides credit to the cooperatives and thus
participates in the rural finance.
• As balancing centers for the central cooperative banks by
making available the surplus funds of some central
cooperative banks. The central cooperative banks are not
permitted to borrow or lend among themselves.
•They finance, control and supervise the central cooperative
banks and through them the primary credit societies.
7. Capital of SCBs:
• State cooperative banks obtain their working capital from own funds,
deposits, borrowings and other sources:
• Own funds include share capital and various types of reserves. Major
portion of the share capital is raised from member cooperative societies
and the central cooperative banks, and the rest is contributed by the
state government. Individual contribution to the share capital is very
small.
• The main source of deposits is also the cooperative societies and central
cooperative banks. The remaining deposits come from individuals, local
bodies and others.
• Borrowings of the state cooperative banks are mainly from the Reserve
Bank and the remaining from state governments and others.
8. Loans and Advances:
• State cooperative banks are mainly interested in providing loans
and advances to the cooperative societies.
• More than 98 per cent loans are granted to these societies of
which about 75 per cent are for the short-period. Mostly the
loans are given for agricultural purposes.
• The number of state cooperative banks rose from 15 in 1950-51
to 21 in 1960-61 and to 28 in 1991-92. The loans advanced by
these banks increased from Rs. 42 crore in 1950-51 to Rs. 260
crore in 1960-61, and further to Rs. 7685 crore in 1991-92.
9. PROBLEMS FACED BY SCBs
• There have been instances where few societies have made large
advances to primary credit societies and later on recovery has
become a serious problem.
• Overdue have been piling up for a variety of reasons.
• Credit limits for central co-operative banks have not been
carefully set.
• The state cooperative banks are also dealing with a number of
other issues.
