Problems Faced By the Urban Cooperative Banks in India

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Today, urban cooperative banks (UCBs) compete on an equal footing with commercial banks in a highly competitive market. They accomplish so by effectively implementing the cooperative principles that underpin their company model, which is owned by its members, and whose primary objective is to provide the greatest services to them rather than maximize profit for shareholders. It is not fair to compare UCBs, which serve the poorer sections of the community, to MNC banks, which have no social responsibilities. Since their beginnings, the UCBs have experienced several alterations. The changes that have occurred in UCBs have been more important and dramatic than those that have occurred elsewhere. The performance of UCBs is affected directly and indirectly by the dramatic changes in the policy environment of both the state and federal governments affecting the operations of the urban banking system. The performance of the urban cooperative banking segment, which was once considered one of the most stable and rapidly expanding segments of the banking system, has now devolved into managerial, financial, and operational issues, making it one of the weakest, with periodic failures and irregularities.

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