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One crore is the authorised capital of Regional Rural Bank.

Regional Rural Banks are included by the Reserve Bank of India in Schedule II.

Suggestions for improving Co-operative Banks are as follows:

• The people should be made educated in order to make them understand the importance of cooperation. 
• The employees should be taught the banking principles which will help in the proper management of the banks.

Co-operative Bank: When some persons join together to form a society and start accepting deposits and provide loans to their members then that society is known as Co-operative Bank or Co-operative Credit Society. The main objective of the Co-operative Bank is to provide financial assistance to people who are poor and do -not have any resources. These banks accept small deposits from the members and often ask the members to subscribe to the share capital of the bank.

The bank helps the members of the bank by giving them loans for productive needs from time to time.

Importance of Co-operative Bank: 

The main object of Co-operative Banks is to provide financial assistance to poor. 

Following are the main advantages of Co-operative Banks:

1. The rate of interest charged is low and the needy have not to go to the moneylenders for financial assistance. 

2. The people develop the habit of saving. 

3. The members gain confidence as all of them work with the Co-operation of each other. 

4. People become independent and they have not to depend on others. They also develop a feeling of responsibility.

5. Agriculture and industry receive encouragement. 

6. People are encouraged to utilise their money for productive functions. 

7. Development of agriculture and cottage industries makes the farmers financially sound.

Achievements of the Co-operative Movement in India:

The main achievements of the Cooperative Movement in India are as below:

1. Co-operation: It has encouraged a feeling of co-operation among rural people towards economic progress. 

2. The decrease in the influence of sahukars: The contribution of chukars to rural credit has come down to about 16 per cent from earlier 70 per cent contribution. 

3. The decline of conservative attitude: The co-operative movement has significantly modified the conservative attitude of rural people to a give-up the ancient custom of death-feast, etc.

 4. Cheap credits: The interest charged by the co-operatives is much less than that charged by sahukars and so rural people now avail the facility of cheap credits.

5. Amount of loans: The amount of loans given to rural industries and agriculture has increased substantially and since it is quite cheap, these people have been appreciably benefitted.

6. Reduction of debts on farmers: Because of credit co-operatives, the debts on farmers are regularly reducing.

7. New methods of agriculture: The credit co-operatives have guided the farmers to learn to adopt new and improved methods, and for purchasing various equipment, cheap credits have been made available by these co-operatives.

8. New hope for development: Because of the co-operative movement, a new hope of economic development has encouraged rural people for doing hard work. 

9. The habit of thrift: Since the facilities of deposits have reached their doorsteps, the habit of thrift has been inculcated amongst the rural people. 

10. Storage and marketing: Co-operative societies now help in arranging facilities of storage and marketing to farmers. A farmer can now sell his produce through co-operative society.

11. Economic improvements: Non-credit societies like Housing Cooperatives, Consumer Co-operatives, etc., have helped in achieving economic improvements among rural and urban people.

(c) Each district or tehsil of the state

Defects of Co-Operative Banks or Credit Societies The Co-operative movement in our country could not get the desired success. The Cooperative Banks have been able to solve the problem of rural debts in a very small area. 

The main reason for it, are the defects in co-operative credit societies which are as follows :

1. Illiteracy: In our country major portion of the population is uneducated and they do not understand what is co-operation. 

2. Self Interest of Members: The members of the society provide loans to their friends and relatives because of which other members are not benefitted and do not get the facility of loan. Sometimes it also happens that these loans are not recovered from the friends and relatives of the members. 

3. Improper Functioning: In rural areas, the members responsible for the proper functioning of society do not have knowledge of banking, so they are unable to handle the affairs properly. 

4. Dishonest Members and no proper records are kept: The records of these societies are not kept properly nor they are audited. The members are dishonest and indulge in fraudulent practices. 

5. Lack of Co-operation: The basic principle of co-operative societies is co-operation and coordination among the members, but in India, we find that it lacks among the members. In every village of our country there is groupism, casteism, etc. then under these circumstances how can we expect co-operation and co-ordination among the members. 

6. Lack of Funds: The Indians are poor and they are not able to deposit money with the societies which result in lack of funds with the society. Due to lack of funds, the members are not able to get the loans according to their needs.

7. A problem in getting Loan: The members face problem in getting the loan because before giving the loan, the society checks the credibility of the member and other formalities have to be completed. All this takes a lot of time and the member is unable to get the loan at the time of need. Ultimately they have to take a loan from money-lenders or Mahajan. 

8. Government’s Intervention: The people do not have much faith in societies because of the government’s intervention.in them. The major defect of the Indian Co-operative movement is that it has been implemented by the government requiring the fulfilment of a lot of many formalities and for this reason, the people do not have any interest towards this movement. 

9. The high rate of Interest: The rate of interest charged by these societies is high because they do not have adequate funds and they have to borrow from others. These societies borrow money from Central Co-operative Banks at a higher rate of interest. The rate of interest charged by these societies should be normal So that there is no burden on the members. Generally, the rate  of interest charged by these societies is ranging in between 10% to 14%. 

10. The problem of loan repayment: The loans are not repaid by the members in time. As already told that the societies do not have adequate funds and when the loans are not repaid in time, these societies face an uphill task. The outstanding loans are increasing day by day and major portion of the debts become bad. 

11. Societies only provide financial assistance: The Co-operative societies only provide financial assistance whereas they should also perform the activities of sale and purchase. Multi-purpose co-operative societies can only  take out the people of rural areas from the grip of the Mahajan’s.

12. A very little number of people becoming members: All the persons are unable to become members of society. Thus, only a small number of persons who are financially sound take advantage of society. 

13. Poor Financial Condition: The financial condition of these societies is always very weak. When they do not have adequate funds then how can they provide financial assistance to others? The members do not take much interest in society because their financial needs always remain unfulfilled. 

14. Only influential persons become members: The persons who are wealthy or those who have a political approach become the members of these societies. The poor people do not get any assistance from these societies in spite of the fact that these societies are meant for poor.

15. Political Interference: These societies are now in the grip of the political leaders and the basic principle for the formation of these societies has been defeated by these leaders. In many places, these leaders have formed the co-operative societies which are closed after receiving aid from the government. 

Suggestions for Improving Co-Operative Banks 

Suggestions for improving Co-operative Banks are as follow: 

1. The people should be made educated in order to make them understand the importance of co-operation. 

2. The employees should be taught the banking principles which will help in the proper management of the banks. 

3. Only short term loans should be given so that all the members are benefitted. 

4. The penalty should be imposed if the loans are not repaid in time. 

5. Before giving the loan it should be checked whether the loan is being given for productive needs or not. 

6. The Central Bank should give loan to these societies on a lower rate of interest. 

7. The records should be properly kept by these societies which should be inspected and audited from time to time so that fraudulent practices are minimised. 

8. There should be a maximum limit for granting a loan and no member should be given loan more than the maximum limit. 

9. The principles of co-operative should be made known to the public. 

10. The government should also help these societies according to their needs. 

11. These societies should increase their reserve funds which will make their financial position strong.

12. Instead of competing with these societies, the Commercial Banks should provide assistance to them.

13. In addition to co-operative credit societies, multipurpose cooperative societies should be formed so that they could also help the people in other walks of life.

14. These societies should be kept free from politics and there should be minimum interference of the government.

15. The co-operative societies should try to get deposits so that their financial position will become strong.

Correct option is  (b) Farmers

Importance of Co-operative Bank in Rural Economy. India is a country of villages. The people living in rural areas are poor. The development of the country depends upon the economic development of the villages. The financial position of our rural areas was never good and because of it, our agriculture could not improve. Someone has rightly said: “The Indian farmer horns in indebtedness leads his life in indebtedness and dies leaving the burden of indebtedness on his heirs.” 

The shortage of funds for agriculture purposes are fulfilled by money-lenders or Mahajan. The money-lenders charge a very high rate of interest because they enjoy the monopoly. The poor farmers are unable to repay the loan and are always at the mercy of the money-lenders. The cottage industries do not prosper due to lack of financial assistance. The artisans to have to depend on the money-lenders.

(a) Unlimited

Ten members required to form Primary Co-operative Credit Societies.