Surat Investment：[Financial Industry] Indian cooperative banking system inspection

Researcher of Zhao Zixiang Xingye Research Company's financial industry

Chen Haoxing Industry Research Company Senior Researcher's Financial Industry

Deputy General Manager of Li Yanming Xingye Research Company's Financial Industry Research Department

Chairman of the Academic Judgment Committee of the Economist of the Lu Political Commission Xingye Bank of Economist Xingye Research Company

India, cooperative finance

India's cooperative banks are controlled by members and implemented a classic cooperation system that implements a person with a per capita per person. Its purpose is to maximize the interests of members instead of pursuing short -term benefits.Indian cooperative banks are also for non -member exhibitions. The source of funds is mainly deposits, membership shares, issuance bonds, and borrowing from other financial institutions and government departments.

The Indian cooperative banking system is divided into urban and rural cooperative banking systems.Among them, the urban cooperation banking system is composed of urban cooperative banks, and its business is mainly small and medium -sized enterprise finance and personal finance.The rural cooperative banking system is divided into short -term rural cooperative banking system and long -term rural cooperative banking system, which focuses on providing customers with short -term and long -term loans.The short -term rural cooperative banking system in the rural cooperative banking system consists of three floors: the first floor is the primary cooperative credit cooperative, the second floor is the regional center cooperation bank, and the third floor is the Bangli cooperation bank.The junior cooperative credit cooperatives mainly exhibit the most grass -roots customers.The regional center cooperation bank is controlled by the junior cooperative credit cooperative and is responsible for the exhibition industry at the district level.Bangli Cooperation Bank is controlled by the Regional Center Cooperation Bank and is responsible for the exhibition industry at the State level.The long -term rural cooperative banks in the rural cooperative banking system are composed of junior land development banks and Bangli Land Development Bank.Among them, the Primary Land Development Bank is facing the most grass -roots level exhibition industry, and the State Land Development Bank is in the first level of the state.

Indian cooperative banks are constrained by the Indian Bank of India, the cooperative law of various states, and the Basel Agreement i.In terms of institutions, India's cooperative banks have been regulated by Bangli's cooperative financial regulatory agencies and Indian central banks.The problems faced by Indian cooperative banks are mainly insufficient capital, political intervention, relatively loose supervision, unclear regulatory functions, poor professional management, and overdue loan problems.

1. The overall introduction of the Indian cooperative banking system

1.1 General Introduction to Indian Cooperative Banking System

India's cooperative banks are controlled by members and implemented a classic cooperation system that implements a person with a per capita per person. Its purpose is to maximize the interests of members instead of pursuing short -term benefits.In addition to serving members, India's cooperative banks are also facing non -member exhibition.Indian cooperative banking sources are mainly deposit, membership shares, issuance bonds, borrowings from other financial institutions and government departments.From 2004 to 2012, Indian cooperative banks' loans to agriculture accounted for 17%-25%of the total agricultural financial loan in India [1].

The Indian cooperative banking system is divided into urban and rural cooperative banking systems.Among them, the urban cooperation banking system is composed of Urban Co-operating Banks, mainly for small and medium-sized enterprise finance and personal finance.The rural cooperative banking system is divided into short -term rural cooperative banking systems and long -term rural cooperative banking systems. It focuses on providing customers with short -term and long -term loans. The business is mainly agricultural and personal finance.Among them, the short-term rural cooperation banking system is composed of Primary Co-operative Credit Society, and the regional center cooperation bank [2] (Central Co-Operat Banks), State Co-operatove Banks.The long -term rural cooperative banking system consists of Primary Land Development Banks and State Land Development Banks [4].

The URBAN Co-operating Banks in the Urban Cooperation Banking System is mainly for residents and SMEs in urban areas.Before 1996, Indian Urban Cooperation Bank could only show the non -agricultural customer exhibition industry, and the relevant restrictions after 1996 were canceled.

The short -term rural cooperative banking system in the rural cooperative banking system consists of three layers [5]: The first floor is the junior cooperative credit cooperative, the second floor is the regional center cooperation bank, and the third floor is the Bangli cooperation bank.The junior cooperative credit cooperatives mainly exhibit the local customers.The Regional Center Cooperation Bank is responsible for overall primary cooperative credit cooperatives, and is controlled by junior cooperative credit cooperatives. It is responsible for the district level [6].Bangli Cooperation Bank is responsible for coordinating the regional center cooperation bank and controlled by the Regional Center Cooperation Bank, and is responsible for the first level of the state. [7]

Long -term rural cooperative banks are composed of two -layer of primary land development banks and Bangli Land Development Bank.Among them, the Primary Land Development Bank faces the most grass -roots local exhibition industry, while Bangli Land Development Bank is exhibited in the first level of the state, and the Bangli Land Development Bank is responsible for coordinating the junior land development bank.Land Development Bank generally offers long -term agricultural loans. The borrowing amount of borrowers is generally determined by its shares size, and the repayment period is generally 20 to 30 years.

At present, the main problems facing Indian cooperative banks include insufficient capital, strong political intervention, loose supervision, unclear regulatory functions, poor professional management capabilities, overdue loans, etc.Liabilities have always been the main obstacles of the majority of Indian cooperative banks, which has led to Indian cooperative banks to generally rely on the capital of government and commercial banks to increase their own liabilities and equity scale to support the credit of the assets; (2) political intervention in political intervention: Some Indian politicians make their relatives become members of the relevant cooperative bank board through intervention and manipulation, and then interfere with the normal operation of cooperative banks, and even obtain improper benefits, such as approval of loans that are beneficial to themselves; (3)Regulatory strength is relatively loose: Compared with commercial banks, regulators such as the Indian Bank of India are not strict with the supervision of cooperative banks. The Central Bank of India only conducts 1 inspection of cooperative banks each year, and the inspection of commercial banks is more frequent;(4) The division of regulatory functions is unclear: Indian Cooperation Bank is regulated by the Central Bank of India and the state government, and there are problems with the coordination of regulatory functions.(5) Poor professional management: Indian cooperative banks are often unwilling to use digital new technologies such as computer data management. At the same time, due to lack of funds and lack of personnel training, cooperative bank management is not professional.(6) Overdue loan problems: Some cooperative bank overdue loans have increased year by year, and the recovery of funds is limited, which will affect the bank's loan capacity [8].

1.2 History of the development of cooperative banking in India

Indian cooperative financial institutions originated in the British colonial period.In 1889, India established the first cooperative financial organization.In order to solve the phenomenon of credit shortage in rural areas at that time, in 1904, the British Indian government accelerated the establishment of Indian cooperative financial organizations through the Coopative Credit Societies Act.In 1904, India's first urban cooperative bank was established, and the institution was also the first primary credit cooperative.In 1912, the British Indian government amended the "Cooperation Credit Association Law", which allowed the existence of regional center cooperative banks and Bangli cooperative banks, and gradually formed a layered cooperation between junior credit cooperatives, regional center cooperatives, regional center cooperative banks and Bangli cooperative banks.Sexual financial system.In 1942, the British India passed the Multi-Unit Coopetive Credit Societies Act, which improved the legal constraints of cooperative banks operating cross-state.

Although India's cooperative banks have developed during the British colonial period, its support for rural finance is still limited.In 1950, Indian cooperative banks provided about 3.1%of Rural Finance in India.In order to change the financial situation in rural areas in India, in 1954, the Indian government established the "All -Indian Rural Credit Investigation Commission" to solve rural credit issues and other financial problems in rural communities.In 1955, India passed the first law that specialized in cooperative financial institutions after independence, namely the new COOPERATIVE CREDIT SOCIETIES Act."content.In 1961, the Central Bank of India conducted a comprehensive investigation of urban cooperative banks and released a report that the report acknowledged that the financial cooperation bank's finances were relatively sound and encouraged more places to establish more grass -roots cooperative banks.In 1966, the Indian government clarified the dual regulatory system for cooperative banks to set up cooperative banks and cooperative banking regulatory agencies affiliated to the Bangli government.With the development of the Indian government encouraging cooperative banks, the proportion of rural loans issued by Indian cooperative banks accounted for rural credit increased from 3.1%in 1950 to 15.5%in 1960, and then increased in 1970 to 22.7%[9]Essence

The Indian government put forward relevant requirements or discussions on the development and supervision of cooperative banks in the first five -year plan to the seventh five -year plan.During the first five -year plan (1951-1956), the Indian government strengthened the supervision system of the cooperative financial system.During the second five -year plan (1956 - 1961), the Indian government expanded the scope of the cooperative bank's exhibition industry and liberalized the restrictions on credit investment in the warehousing field.During the third five -year plan (1961-1966), India focused on strengthening the talent training and scale of cooperative banks.During the fourth five -year plan (1966-1971), India focused on strengthening the operational efficiency of cooperative banks.During the fifth five -year plan (1971-1976), India ’s key planning to establish a peasant service agency [10].During the sixth five -year plan (1976-1981), the Indian government planned to formulate a key plan for cooperative banks to drive economic development and expand the scope of cooperative banking industry.The seventh five -year plan (1981-1986) also focused on expanding the coverage of the exhibition industry of cooperative banks to promote employment in more regions and reduce national poverty.

1.3 The supervision and governance structure of Indian cooperative banks

India's cooperative banks are constrained by the Indian Bank of India, the cooperative law of various states, and the Basel Agreement i.In terms of institutions, India's cooperative banks have been dual supervisory by Bangli's cooperative financial regulatory agencies and Indian central banks.India's Bangli cooperative financial regulatory agencies are divided into two categories: one type of cooperative banks that are only supervised in a single state operation, known as the State Registration of Coopetive Societies (RCS), and one categoryIt is an institution that regulates a cooperative bank that operates in multiple states, called the Central Regentrars of Coopetive Societies (CRCS).Bangli cooperative financial regulatory agencies exercise the power to establish, register, manage, consolidate, reorganize, or clear cooperative banks in accordance with their respective cooperative laws.The Bank of India is responsible for regulatory functions related to cooperative banking business, such as issuing licenses, interest rates, loan policies, investment and prudent risk exposure specifications for new banks/branches.

In practice, the Indian central bank and Bangli cooperative financial regulatory agencies often have phenomena such as unclear functions. Therefore, relevant Indian persons call on the reform related system to establish a cooperative bank regulatory agency independent of Bangli City and the country similar to the Indian central bank.Nature cooperative bank regulatory agency.

In addition, according to the Indian Cooperation Society Law, India's cooperative banks need to allocate their net profit in the following year: (1) In the reserve funds of not less than 25%of the net profit investment preparation fund;2) In the Education Foundation under the Education Foundation of the Indian National Cooperation Alliance [12] (NATIONAL COOPERAN of India (NCUI); (3) the risk or stability of the net profit of not less than 10%will be invested at no less than 10%of the net profit in less than 10%.In the fund, the risk or stable fund is mainly to deal with the risk of farmers' income due to unpredictable food harvest due to natural disasters; (4) the highest amount donated to other institutions or individuals must not exceed 5%of the net profit of the year.

The governance structure of Indian cooperative banks is generally composed of general meetings, boards, auditors, and CEOs.Among them, each member has the same voting rights regardless of the size of the shares, and is responsible for the voting members and management of the board of directors.Members must not be voted by others [13].

The power of the general meeting is: (1) reviewing financial reports; (2) reviewing compliance reports; (3) distribution of net profit; (4) approved annual budget; (5) review of various types of funds; (6) approvalLong -term operation plan; (7) Fleessing members; (8) Modify the company's articles of association; (9) review the financial report of the subsidiary;Members of Election Management; (13) Election auditor.Members of the General Assembly are composed of members, and members generally come from the place where the cooperative bank is located.

The power of the board of directors is mainly: (1) to absorb new members to enter the meeting; (2) formulate new strategic plans and establish specific plans and phased goals for specific completion plans; (3) regular inspection of various types of operating conditions; (4) Preparing the annual annual yearReport, annual strategic plan and budget, etc. and submit it to the member meeting for review and voting; (5) prepare for audit and compliance reports and submit it to the member meeting for review and voting; (6) handling real estate; (7) if the general meeting agreesIts agency implements part of the power, and the relevant power is implemented, such as the members of some cooperative banks hand over the approved budget power to the board of directors;The members of the board of directors are mainly elected by the general meeting.

The main power of the auditor is to be responsible for auditing cooperative banks, and the specific audit group will be elected by the general meeting.

The main power of management is to handle various daily management affairs of cooperative banks, and the highest member is CEO.Management members are generally elected by the General Assembly, and some CEOs of some cooperative banks are elected by the board of directors.

2. Introduction to the Case of Cooperation Bank in India

2.1 Indian Saraswat Cooperation Bank's business status

Saraswat Co-operative Bank LTD is one of the oldest and most famous urban cooperation banks in Indian history. It was established in 1918, headquartered in Mumbai, and operated in many states in India.

At the end of the fiscal year 2022 [14] The largest investment target of the asset side of the Saraswat Cooperation Bank was general loans, accounting for 50.8%, followed by investment assets, accounting for 25.9%.

At the end of the fiscal year in 2022, Saraswat Cooperative Bank's investment assets were concentrated in central and local government bonds, accounting for 67.9%, and 15.3%of investment assets were invested in deposit.

At the end of 2022, the largest source of funds on the liabilities of the Saraswat Cooperation Bank's liabilities was the customer's deposit, accounting for 80.2%.

In terms of deposit structure, at the end of fiscal 2022, the maximum source of deposits of Salaswat Cooperative Bank's customer deposits was regular deposits, accounting for 68.6%.

At the end of the fiscal year in 2022, the largest source of the Saraswat Cooperation Bank's income was credit business income, accounting for 85.4%of the total income.

From 2012 to 2014, the adverse rate of Salaswat cooperation banks was higher than the average adverse rate of the Indian banking industry. From 2014-2022, the adverse rate of Indian Sashawat Cooperation Bank was higher than the average level of the Indian banking industry.

At the same time, from 2013-2020, the net interest margin of Saraswat Cooperation Bank was lower than the average net interest difference between the Indian banking industry.

From the perspective of business indicators, the ROA of the Salaswat Cooperation Bank of Salaswat in 2011-2014 is lower than the average level of the Indian banking industry.

From 2013-2022, the asset growth rate of Salaswat Cooperation Bank's assets is high and low compared with the average level of the Indian banking industry, and the general trend is consistent.

2.2 Indian Saraswat Cooperation Bank Risk Prevention and Supervision

India's Saraswat Cooperation Bank sets up the credit risk committee, the operating risk committee and the risk management committee to manage the relevant risks.The specific risk category is mainly credit risk, market risk, operating risk, fraud risk, ESG risk, reputation risk, etc.

The Bank of India stipulates that Capital to Risk Weight Assets Ratio (Crar) has a minimum of 12%.

IntroductionSurat Investment

3.1 India TNSC Bank's operating status

India's Tamil Nadu State Apex Co-OPBANK (TNSC Bank) is India's Tamil Nadang's short-term rural cooperation banking system in India.India's Tamil Nadang is the second highest GDP in India (that is, the provincial administrative unit in my country), and it is also a state that is relatively concentrated in the distribution of Indian cooperative banks. Its rural cooperative banking system has certain significance.

At the end of fiscal year in 2021 (March 31, 2022), TNSC Bank's assets were mainly invested to general loans, accounting for about 53.5%.

At the end of fiscal year in 2021, TNSC Bank's investment assets were mainly invested in the central and local government bonds, accounting for about 90.7%.

At the end of fiscal year in 2021, the source of liabilities of TNSC banks was mainly borrowed from the government and other financial institutions, accounting for 50.1%, followed by customer deposits, accounting for 47.4%.Compared with the above -mentioned Saraswat Cooperation Bank, its debt deposit accounts for a lower proportion, and it depends more on other non -deposit financing.

During the fiscal year of 2021, the main income of TNSC Bank was credit business revenue, accounting for 69.1%.

From 2011-2016 TNSC Bank ROA is higher than the average level of the Indian banking industry, and from 2017-2020, it is lower than the average level of the Indian banking industry.

From 2013-2021, the growth rate of assets of TNSC banks is consistent with the general trend of the average level of the Indian banking industry.

From 2012 to 2014, the TNSC bank's adverse rate was higher than the average level of the Indian banking industry. From 2015 to 2021, the average level of the Indian banking industry was lower.Jaipur Stock

In addition, TNSC Bank sets up various risks such as risk prevention departments to prevent credit risks.

TNSC: India's Tamil Nadu State Apex Coopetive Bank (TNSC) is the Bangli Cooperation Bank in the short -term rural lease bank system in Tamiline, India.India Tamil Nadang is the second highest GDP in India, and its rural cooperative banking system has certain representative significance.

1. Cracogna, DANTE, Antonio FICI, and Hagen Henrÿ, EDS. International Handbook of Coopetive Law. Heidelberg: Springer, 2013.

2. Matkar, Sharmishtha, and Mr Anil KeShav Jadhao. "Agricultual Credit in India: Status and PROBLEMS." Research Front 3.2 (2015): 125-132.

3. Shruti Goel, Cooperative Banking System in India, Ipleaders.in, [EB/OL], 2019/10/19 [2023/11/6],

[1] Matkar, Sharmishtha, and Mr Anil Keshav Jadhao. "Agricultual Credit in India: Status and PROBLEMS." Research FRONT 3.2 (2015): 125-132.

[2] Some documents have made such banks into district -level cooperation banks.

[3] There are also some Indian literature called such banks as Central Land Development Banks.

[4] Not all primary land development banks and Bangli Land Development Bank have implemented a cooperation system. Many Indian primary and state Land Development Bank implements a joint -stock system.

[5] A small number of small -scale states in India, such as Sikkim, only set up junior cooperative credit cooperatives and Bangli cooperation banks, and there is no existence of regional center cooperation banks.

[6] The various states of India are equivalent to India's provincial -level administrative agencies, and the district is equivalent to India's city -level administrative institution.Agra Investment

[7]Shruti Goel, Cooperative Banking System in India, Ipleaders.in, [EB/OL], 2019/10/19 [2023/11/6],

[8]Shruti Goel, Cooperative Banking System in India, Ipleaders.in, [EB/OL], 2019/10/19 [2023/11/6],

[9] Shruti Goel, COOPERATIVE BANKINGINGING SYSTEM in India, iiceaders.in, [EB/OL], 2019/10/19 [2023/11/6],,,],,,],, 2023/11/6],,,],,,, 2023/11/6],,,, to],, 2023/11/6],,,, to],, 2023/11/6],,,, to],, 2023/11/6],,, to],,,, to 2023/11/6],,,,, 2019/19 [2023/11/6],,,,, 2019/10/19 [2023/11/6],,,,, 2019/10/19 [2023/11/6],,,,, to 2023/11/6],,,,, 2019/10/19 [2023/11/6],,,,, 2019/10/19 [2023/11/6] ,,

[10] The Farmers Service Club is a grass -roots farmer cooperation organization established by the Indian government in 1973. Its funds are derived from the government and financial institutions and are responsible for providing a long -term and long -term agricultural loan for grass -roots farmers.

[11] Reserve Fund is a type of fund that many countries specifically stipulates that cooperative financial institutions must be established. This type of fund comes from the net profit of cooperative financial institutions. Generally speaking20%-40%of the reserve fund, and cannot be distributed to members.Unless special circumstances, the funds of the preparation fund shall not be used.

[12] The National Cooperative Union of India (NCUI) is an federation of Indian cooperative institutions, which contains members of India's cooperation institutions. The purpose of its establishment is to promote Indian cooperation modelsAnd responsible for managing funds that support the cause of education and other undertakings.

[13] CracoGna, Dante, Antonio FICI, and Hagen Henrÿ, EDS. International Handbooks.

[14] The beginning of the fiscal year in India is from March 31 to March 31 of the year, and the end of 2022 is March 31, 2023.

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