A Co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank. Co-operative banks are often created by persons belonging to the same local or professional community or sharing a common interest. Co-operative banks generally provide their members with a wide range of banking and financial services (loans, deposits, banking accounts).
The Co-operative banks in India started functioning almost 100 years ago. The Co-operative bank is an important constituent of the Indian Financial System, judging by the role assigned to co-operative, the expectations the co operative is supposed to fulfil, their number, and the number of offices the co-operative bank operate. Though the co operative movement originated in the West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The cooperative banks in India plays an important role even today in rural financing. The businessess of co-operative bank in the urban areas also has increased phenomenally in recent years 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 co-operative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.