Co-operative Bank Scams in India

People in the rural areas largely depended on money lenders who lent money at very high rates of interest. Thus, there was need to create an institution which would cater to the needs of ordinary people and was based on the principles of cooperative organisation and management. In 1904, the first legislation on co-operatives was passed. In 1914, the Maclagen committee suggested a three tier structure for cooperative banking i.e Primary Agricultural Credit Societies at the grass root level, Central Cooperative Banks at the district level and State Cooperative Banks at the State or apex level. Cooperative banks were expected to serve as substitutes for money lenders, and provide both short-term and long-term institutional credit at reasonable rates of interest.

The urban areas are served by the Primary (Urban) Cooperative Banks (PCBs/UCBs) whereas the rural areas are largely served by two sets of institutions, the PACSs and LDBs, dispensing short-term and long-term credit, respectively. UCBs have a three-tier structure with the State Cooperative Banks (SCBs) at the apex level, the District Central Cooperative Banks (CCBs) at the intermediate level and the Primary Agricultural Credit Societies (PACS) at the grass root level (Refer Table II). Under the long-term credit structure, State Cooperative Agriculture and Rural Development Banks (SCARDBs) are at the apex level and the Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) are at the base level...