The Co-operative bank has a history of almost 100 years. The Co-operative banks are an important constituent of the Indian Financial System, judging by the role assigned to them, the expectations they are supposed to fulfill, their number, and the number of offices they operate.
Their role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary co-operative banks.
Co-operative Banks in India are registered under the Co-operative Societies Act. The RBI also regulates the cooperative bank. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.
Cooperative credit structure is the single largest institutional credit delivery system in the State. It provides credit to the people particularly in rural areas at reasonable interest rate thereby reducing the dependency of the farmers on the informal credit source and usurious rate of interest. Geographically and culturally it is the most convenient institutional arrangement for availing the credit by farmers.