Question

Advantages and disadvantages of cooperative banks in india

Answer 1

Co-operative banks are called banks which are based on cooperative basis with government and work in ordinary banking business. Like other banks, the co-operative banks are also set up through shares to raise money, deposit money and give credit.

Advantage of cooperative banks:

Cooperative banks play an important role in promoting rural finance and are particularly suited to Indian conditions. The main objective of the co-operative bank is to provide an effective alternative to the trader's faulty loan system of the lender of the village. The co-operative banks make rural credit both direct and indirect.

One important advantage of cooperative credit system is to bring about the change in the nature of the loans.

Cooperative banks encourage savings and investment by developing savings habits among the general public. Cooperative banks also help in the beginning of better agricultural methods.

Disadvantage of Cooperative banks:

Organizational and financial limitations of cooperative banks greatly reduce their ability to provide adequate credit to the rural population.

A serious problem of co-operative banks is the overdue loans of co-operative institutions which have been growing steadily for years.

There have been major regional inequalities in the distribution of loans of cooperative banks. Most of the benefits of cooperative banks are taken by large landowners due to their strong socio-economic status.

Answer 2

There are some advantages and disadvantages of cooperative banks are :

ADVANTAGES :

• The cooperative banking system used to promote rural finance.

• Cooperative credit is used to purchase chemical fertilizers, seeds and modern implements, etc.

• It also helped the members to buy their inputs on low price and sell their produce at high prices.

DISADVANTAGES:

• These banks charge very high interest rates on the loans provided by them.

• The steps of receiving a loan from cooperative banks are so complicated that is why people need help of the money lender.