Features of an Urban Co-operative Bank

An urban co-operative bank combines the character of a co-operative society with the business of banking, and its features flow from this twin nature. The main features are set out below.

• A co-operative body — It is registered under the co-operative societies law (in Maharashtra, the Maharashtra Co-operative Societies Act, 1960, or, if it works in more than one state, the Multi-State Co-operative Societies Act, 2002). On registration it becomes a body corporate with a separate legal existence, a common seal and perpetual succession.
• Banking is its business — Unlike an ordinary credit society, a UCB carries on full banking business under a licence from the Reserve Bank of India: it accepts deposits withdrawable by cheque, lends, and offers the range of services a bank provides.
• Urban and semi-urban area of operation — Its work is confined to towns and cities and their surrounding semi-urban belts. It does not, as a rule, finance agriculture, which is the field of the rural co-operative credit structure.
• Members of small and moderate means — Its members and customers are chiefly small traders, artisans, self-employed persons, small industrialists and salaried people — the very groups the big banks once neglected.
• Democratic management — Like every co-operative it is managed by a committee elected by the members on the principle of 'one member, one vote', regardless of the number of shares a member holds, so that control rests with people and not with capital.
• Service before profit — Its primary motive is to serve its members and its locality with cheap, convenient banking, not to earn the maximum profit; any surplus is used for reserves, members' benefit and the development of the bank.
• Dual regulation — It is controlled at the same time by the Registrar of Co-operative Societies (as a co-operative) and by the Reserve Bank of India (as a bank) — the defining feature of urban co-operative banking, explained in Section 5. …