Urban Cooperative Banks

Up to the year 1996, these banks were only permitted to lend money for causes that were not related to agriculture. 

This distinction is no longer relevant in modern times. 

Historically, these banks were focused on serving towns, localities, and workplace organisations as their primary customers. They, for the most part, extended credit to small borrowers and companies. 

Their range of activities now encompasses a far broader range of activities.

Under the direction of Vithal Laxman, popularly known as Bhausaheb Kavthekar, the “Anyonya Sahakari Mandali” was perhaps the earliest known mutual aid association to be established in India. 

It was established in 1889 in the state of Baroda, which had previously been a princely state.

In the beginning stages of their development, urban cooperative credit societies began to be organised on a community-based basis so that they could fulfil the members’ need for consumer-focused lending.

Especially among the middle class and organised labour, salary earners’ societies that encouraged habits of frugality and self-help had a big part in popularising the movement. 

Salary earners’ societies also played a role in the movement’s spread. 

From the time of its inception until the present day, the primary objective of UCBs has been to collect savings from 

urban groups with moderate and low incomes and to distribute credit to its members, the majority of whom belonged to more vulnerable social groups. 

This mission continues today.

Cooperative Credit Societies Act

The Cooperative Credit Societies Act, which was passed into law in 1904, was what provided the movement with its true push forward. 

In October of 1904, Canjeevaram (then known as Kanjivaram), which was located in what was formerly the province of Madras, became the location of the first urban cooperative credit society. 

One of the most well-known credit societies was the Pioneer Urban, which was established in Bombay on November 11, 1905. 

Another notable credit society was the No. 1 Military Accounts Mutual Help Co-operative Credit Society, which was located in Poona (January 9, 1906).

In the Belgaum district, the Cosmos in Poona (January 18, 1906), 

Gokak Urban (February 15, 1906),

and Belgaum Pioneer (February 23, 1906); 

and in the South Ratnagiri (now Sindhudurg) district, 

the Kankavli-Math Co-operative Credit Society and the Varavade Weavers” Urban Credit Society (March 13, 1906). 

The Bombay Urban Co-operative Credit Society, which was founded on January 23, 1906 and was supported by Vithaldas Thackersey and Lallubhai Samaldas, was the most notable of the early credit companies.

Cooperative banks located in urban areas

Balloon Street in Manchester serves as the location of the headquarters for The Co-operative Bank plc, which is a retail and commercial bank in the United Kingdom.

The Co-operative Bank is the only high street bank in the United Kingdom to have a customer-led ethical policy that is written into the bank’s articles of association.

This makes the Co-operative Bank unique.

The Ethical Policy was initially implemented in 1992, and in 2013 it was formally included into the Bank’s constitution.

In 2015, in response to the approximately 320,000 consumer opinions expressed in a survey, the company’s Ethical Policy was updated and enlarged. 

The most recent report on Values and Ethics was completed and distributed in May of 2020.

The Bank has recently been converted into a public limited company, and its debt securities have been listed on the London Stock Exchange.

It does not have publicly traded equity. The Co-operative Bank Finance plc is the only company that has shares in the bank. 

The Co-operative Bank Holdings Ltd, which is a private business limited by share capital, is the only stakeholder of the public corporation known as the Co-operative Bank Finance plc.

The 2019 financial statements of the Bank indicate that the holding company is owned by hedge funds and other asset management organisations.

The first bank in India to be run by urban cooperatives

The Shivalik Mercantile Co-operative Bank (SMCB), which has its headquarters in Uttar Pradesh, 

was awarded a licence to operate as a Small Finance Bank by the Reserve Bank of India (RBI) (SFB).

As a result of this, the SMCB became the first Urban Cooperative Bank (UCB) in the nation to make the transition to a Small Finance Bank under the voluntary transition programme.

This was done in accordance with the regulations of the country. The Shivalik Small Finance Bank is planning to open its doors to customers by April 2021 at the latest.

The Significance of Cooperative Banks in Urban Areas

Cooperative banks in cities have been around for longer than a century and are primarily concerned with serving their own communities as providers of financial services. 

Their area of expertise is providing services to customers who fall into the lower middle class and have little resources, in addition to persons who are self-employed and small business owners.

Cooperative banks in urban areas play a significant part in the process of attracting deposits and providing finance to the small-borrower sector. 

This sector includes small-scale businesses, professionals, and retailers, among other types of businesses.

The provision of financial support to the rural sector has been significantly aided by the activities of cooperative banks.

Because UCBs are a tried-and-true model that has been validated for providing services to the unorganised sector in all different kinds of urban centres, they are ideally suited to be duplicated in large numbers throughout all states.

Conclusion

Primary cooperative banks in urban and semi-urban regions are what are meant to be referred to when using the phrase “Urban Co-operative Banks.”

The majority of the borrowers and enterprises that these banks provided loans for were small and centred on towns, neighbourhoods, or workplace organisations.

In metropolitan regions, they focus primarily on providing financing for start-ups, small enterprises, industries, and self-employment, in addition to loans for home purchases and school expenses.

Primary UCBs that have deposits of more than 50 crore rupees are eligible to operate in more than one state, provided that they meet the standards outlined in this article.

Because they are subject to the RBI Act, 1934 (2nd Schedule), they are granted certain rights and are required to fulfil certain obligations. 

The rights include the ability to obtain refinancing and loans from the RBI, while the obligations include things like maintaining cash reserves and submitting returns to the RBI.