A District Co-operative Central Bank (DCCB) is a cooperative bank operating at the district level in various parts of India. It was established to provide banking to the rural hinterland for the agricultural sector with the branches primarily established in rural and semi-urban areas.
Cooperative bank is an institution established on the cooperative basis and dealing in ordinary banking business. Like other banks, the cooperative banks are founded by collecting funds through shares, accept deposits and grant loans.
The banking model consists of a district central bank for each district in every state of India known with a name as a respective District Central Co-operative Bank. The members and their elected directors who represent a multitude of professional cooperative bodies like milk unions, urban cooperatives, rural cooperatives, agricultural and non-agricultural cooperatives, and various others in turn elect the bank’s president. These banks are collectively represented by a State Apex Central Co-operative bank for each state and it acts as the ultimate bank and apex body for the DCCBs in each state. It has been widely observed all over the country that the local politicians who hold the sway over the cooperatives get elected as President of the DCC bank and a president post would mean nurturing for their future political ambitions. However, this trend, which has become a national phenomenon, carries its own advantages and disadvantages.
Structure of Cooperative Banking:
There are different types of cooperative credit institutions working in India. These institutions can be classified into two broad categories agricultural and non-agricultural. Agricultural credit institutions dominate the entire cooperative credit structure.
Agricultural credit institutions are further divided into short-term agricultural credit institutions and long-term agricultural credit institutions.
The short-term agricultural credit institutions which cater to the short-term financial needs of agriculturists have three-tier federal structure:
(a) at the apex, there is the state cooperative bank in each state
(b) at the district level, there are central cooperative banks
(c) at the village level, there are primary agricultural credit societies.
Long-term agricultural credit is provided by the land development banks.
(a) They provide a link through which the Reserve Bank of India provides credit to the cooperatives and thus participates in the rural finance,
(b) They function as balancing centers for the central cooperative banks by making available the surplus funds of some central cooperative banks. The central cooperative banks are not permitted to borrow or lend among themselves
(c) They finance, control and supervise the central cooperative banks, and, through them, the primary credit societies.
Central Cooperative Banks (CCBs):
Functions and Organisation:
Central cooperative banks are in the middle of the three-tier cooperative credit structure.
Central cooperative banks are of two types:
(a) There can be cooperative banking unions whose membership is open only to cooperative societies. Such cooperative banking unions exist in Haryana, Punjab, Rajasthan, Orissa and Kerala.
(b) There can be mixed central cooperative banks whose membership is open to both individuals and cooperative societies. The central cooperative banks in the remaining states are of this type. The main function of the central cooperative banks is to provide loans to the primary cooperative societies. However, some loans are also given to individuals and others.
The central cooperative banks raise their working capital from own funds, deposits, borrowings and other sources. In the own funds, the major portion consists of share capital contributed by cooperative societies and the state government, and the rest is made up of reserves.
Deposits largely come from individuals and cooperative societies. Some deposits are received from local bodies and others. Deposit mobilization by the central cooperative banks varies from state to state.
For example, it is much higher in Gujarat, Punjab, Maharashtra, and Himachal Pradesh, but very low in Assam, Bihar, West Bengal and Orissa. Borrowings are mostly from the Reserve Bank and apex banks.
Loans and Advances:
The number of central cooperative banks in 1991-92 was 361 and the total amount of loans advanced by them in 1991-92 stood at Rs. 14226 crore. About 98 per cent loans are received by the cooperative societies and about 75 per cent loans are short-term. Mostly the loans are given for agricultural purpose.
About 80 per cent loans given to the cooperative societies are unsecure and the remaining loans are given against the securities such as merchandise, agricultural produce, immovable property, government and other securities etc.