Organisation and Functions of SCBs (State Cooperative Banks)

Organisation and Functions of SCBs (State Cooperative Banks)

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The top institutions in the three-tier cooperative credit structure that operate at the state level are State Cooperative Banks. State cooperative banks are present in every state. Due to their three crucial roles, state cooperative banks hold a special place in the cooperative credit structure.

1. They act as a conduit for the Reserve Bank of India to lend to cooperatives and so participate in rural finance.

2. By making available some of the central Cooperative Banks' surplus cash, they serve as balance centres for the central Cooperative Banks. The central cooperative banks are not allowed to lend or borrow from one another.

3. They provide funding for, manage, and oversee the central cooperative banks, which in turn act as a conduit for the major credit societies.

State Cooperative Banks acquire its capital from:

(I) Own funds encompass reserve money and share capital, among other things. The state government contributes the remaining funds, with the majority coming from member cooperative societies and the central cooperative banks. Individual share capital contributions are quite minimal

(ii) Cooperative societies and central cooperative banks are another major source of deposits. The final deposits originate from private parties, regional organisations, and others.

(iii) The Reserve Bank provides the majority of the loans to the state cooperative banks, with the remainder coming from state governments and other sources.

Loans & Advances State Cooperative Banks are primarily interested in lending money to cooperative societies as loans and advances. Loans are provided to these societies at a rate of even more than 98%, with around 75%. In 1950–51, there were 15 state cooperative banks. By 1960–61, there were 21, and by 1991–92, there were 28. From Rs. 42 crore in 1950–1951 to Rs. 260 crore in 1960–1961 and then to Rs. 7685 crore in 1991–1992.