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A STUDY ON THE PROGRESS OF THE SCHEDULED URBAN COOPERATIVE BANKS IN INDIA WITH RESPECT TO MAJOR INDICATORS OF FINANCIAL PERFORMANCE.
*Dr. A RAMACHANDRAN **D.SIVA SHANMUGAM *Director SNR Institute of Management sciences, Coimbatore. ** Assistant Professor, EBET Group of Institutions & Research Scholar - Bharathiar University, Coimbatore. ABSTRACT

The cooperative structure in India can broadly be divided into two segments. While the urban areas are served by Urban Cooperative Banks (UCBs), rural cooperatives operate in the rural parts of the country. As at end-March 2011, there were 1,645 UCBs operating in the country, of which majority were non-scheduled UCBs. UCBs play an important role by providing banking services to the wider sections of the society, especially in rural and semi urban areas. During the period 1991-2004 the UCB sector witnessed substantial growth possibly encouraged by the liberalized policy environment in post reform period. Alongside, a number of entities in the UCB sector became weak and unviable, eroding public confidence and posing systemic risk to the sector. Weak financial position of a number of UCBs has been major cause for concern in the UCB sector for decades. The dual regulatory control over this sector contributed a lot to the weak financial position of this sector. To further understand the UCB sector, an analysis of asset and liabilities and Financial Performance of Urban Cooperative Banks is done. 1. Introduction Cooperative endeavor is not an alien phenomenon to India. Kautilya, in his Arthashastra described, "Guilds of workmen as well as those who carry on any cooperative work shall divide their earnings either equally, or as agreed upon among themselves". The Cooperative Credit Movement in modern India, curiously, is a state initiated movement. The State regime, though it had an un begin political dispensation towards native subjects, had taken a lead to create an institutional credit structure essentially to cater to the needs of farmers and lower income groups. It is further interesting to note that cooperative initiative so taken was perhaps the first ever attempt at micro credit dispensation in India. The Co-operative society Act of 1904 was passed as per the recommendations of Sir Edward Law Committee which was appointed on the basis of the report of Sir Fredrick Nicholson, who was commissioned to study the theory and practice of agricultural land banks in Europe by Government of India. Report of Sir Edward Law was instrumental in realising that cooperative movement would not really advance without a special legislation. However, the urban cooperative credit movement did not receive the impetus till the Maclagan Committee recognized its importance as seen from the fact that urban cooperative credit societies (602) constituted a meager 4.4% of the 13745 agricultural credit societies.
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Evolution and Growth of Urban Cooperative Banking Movement in India

Evolution of urban cooperative banking movement in India can be traced through 3 distinct phases. 2.1 Phase I (1904-1966): Inspired by the success of urban cooperative credit movement in Germany and Italy, the first mutual aid society 'ANYONYA SAHAKARI MANDALI' was organised in the then princely State of Baroda in 1889 under the guidance of Late Shri Vithal Laxman Kavthekar. The enactment of Cooperative Credit Societies Act, 1904, however, gave the real impetus to the movement as the first urban cooperative credit society was registered in Canjeevaram town in the then Madras province in October, 1904. Thereafter, few more

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