Q. With reference to the Cooperative Banks, consider the following statements:
1.Cooperative Banks are owned by the government, while Commercial Banks are privately owned.
2.Cooperative Banks follow the principle of profit maximization.
3.Cooperative Banks in India are regulated by Indian Banking Association (IBA).
How many of the statements given above are correct?
Explanation –
Statements 1, 2 and 3 are incorrect. Cooperative Banks are not owned by the government, but by their members who are also customers. They operate on a cooperative basis, meaning they are owned and controlled by their members, who are often individuals or small businesses in a local community. On the other hand, Commercial Banks can be either privately owned or publicly traded companies, and their shareholders own them.
Cooperative Banks follow the principle of service to their members, rather than profit maximization. They prioritize providing affordable financial services to their members, especially those with limited access to traditional banking services. Cooperative banks operate on the principle of ‘no profit, no loss’ and ‘one person, one vote’.
Cooperative Banks in India are regulated by the Reserve Bank of India (RBI). The Indian Banking Association (IBA) is an industry body representing the interests of banks in India, but it does not have regulatory powers over Cooperative Banks.
Source: Forum IAS
