The Role of Cooperative Banks on the Rural Population

Cooperative banks are something that allows people in rural areas to have financial inclusion in the local areas. The traditional banks can’t reach the people of the village, and therefore, the co-op banks come to that area and meet the gap. It gives people a chance to open an account in those banks which helps them to get banking products and instruments.

These are some of the banks that play a crucial role in the growth and economic development of that region. It has some advantages over traditional banks, and therefore, the people can benefit from the basic financing activities of the cooperative banks.

In this blog, we will look into the impacts of cooperative banks and why it’s an important part of India’s financial inclusion objective.

Helps the Villagers to Get More Financial Service

In the core rural areas of the country, it’s not feasible for large institutional banks to operate in those areas. It happens for mainly two reasons. Once there, a traditional bank will not meet the deposit criteria of the bank.

Secondly, in those rural areas, a bank branch will not get enough credit options which will not make the branch a successful one. To make that happen and give people in those areas financial inclusion, the introduction of cooperative banks has started, and there people can come and invest, which will help them to open a bank account in that bank.

For accessing credit, the loan agency also helps the person to get credit from the banks, and therefore, the people must have these banks to get loans and other financial products at a lower cost.

The Help for the Local Businesses to Get Financial Support

The next advantage of a cooperative bank is to get local financial support for the businesses, which the people of that rural area can get from that institute. Entrepreneurs and other people from the business community can face the challenge that modern financial systems are not there in that area.

To mitigate that problem comes the solution of the cooperative agency, which can work towards the benefit of that community and help a business to grow with access to credit. For example, people can take advantage of small business loans, which will help these entrepreneurs run their local store or shop and make an investment, which helps generate revenue.

Co-Ops helps to Launch the Government Schemes

The next advantage of cooperative banks is that they help to launch government schemes and financial assistance programs and through that, the villagers can benefit from the schemes which are intended for their growth.

For example, agriculture-related schemes and funds are released by the government. For that, cooperative banks are there, which allows a person to get the benefit of these schemes which the government releases.

The next is the case for local MSME businesses, and the government has initiated plans where it will provide some credit assistance to the businesses, all these are disbursed through the nearest cooperative banks.

Helps to Develop Community Oriented Programs

The next advantage of having a cooperative bank is that it doesn’t need to follow the strict licensing and regulation process of the universal bank. Therefore, the company’s structure and hierarchy are quite lucid.

It allows the company or the bank to take a region-centric approach and start activities where the people of that area can have a better living standard and get jobs in the future. For example, cooperative banks take on affordable housing projects to educational institutes. The cooperative bank sometimes funds all of these, and through that, one can create different economic centers in a village or a rural area where people can get their employment.

Women in that area can get in touch with the DSA app in India, and there, one can find an agent who can help those people form an SHG (self-help group).

Co-Op Bank Follows the Structure of Member Participation

Now, in the leadership of a cooperative bank, there is a democratic structure, and therefore, one needs to follow the member participation rule to make key decisions. Here, people from the village community can sit on the member’s board, and therefore through which one can take part in the community activities of the cooperative banks.

These are some of the core aspects of the cooperative banks, which allow the rural population to become financially available and included.