Context:
The Reserve Bank of India (RBI) has released drafts for revised formats of the financial statements, the balance sheet and profit and loss account, for cooperative banks to enhance norms governing regulated entities. These forms were notified in 1981.
Cooperative Banks
Cooperative banks are financial institutions that are owned and operated by their members, who are also the bank’s customers. They are based on the principles of:
- Equal Rights:
- Each member has equal voting rights, regardless of how many shares they hold
- No profit, no loss:
- Cooperative banks operate on this principle
- Cooperation:
- Cooperative banks promote cooperation as well as mutual aid
- Democratic decision-making:
- Members elect a board of directors to oversee the bank’s operations.
Features
- Cooperative banks provide services such as: Savings and loans, Microfinance, Financial education, Cultural sponsorship, and Socially Responsible Investment (SRI) products.
Examples
- The Jharkhand State Co-operative Bank Ltd, The Uttar Pradesh State Co-operative Bank Ltd, The Kerala State Co-operative Bank Ltd.
Financial Regulatory Bodies in India
- Insurance Regulatory and Development Authority of India (IRDAI):
- Regulates and licenses the insurance and re-insurance industries
- Reserve Bank of India (RBI):
- Supervises banks and promotes healthy banking systems
- Securities and Exchange Board of India (SEBI):
- Oversees the securities market and ensures investor protection
- Financial Stability and Development Council (FSDC):
- Coordinates the functioning of various financial regulatory bodies
- Ministry of Corporate Affairs (MCA):
- Sets up rules and regulations for the corporate sector
