Brief History of Urban Cooperative Banks in India

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary
cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to
lend money only for non-agricultural purposes. This distinction does not hold today. These banks
were traditionally centred around communities, localities work place groups. They essentially lent to
small borrowers and businesses. Today, their scope of operations has widened considerably.

The origins of the urban cooperative banking movement in India can be traced to the close of
nineteenth century when, inspired by the success of the experiments related to the cooperative
movement in Britain and the cooperative credit movement in Germany such societies were set up in
India. Cooperative societies are based on the principles of cooperation, - mutual help, democratic
decision making and open membership. Cooperatives represented a new and alternative approach
to organisaton as against proprietary firms, partnership firms and joint stock companies which
represent the dominant form of commercial organisation.

The Co-operative Bank

can trace its origins back to 1872 and the formation of the Loan and Deposit Department
of the Co-operative Wholesale Society. Four years later it changed its name to the CWS
Bank and although in the early years it only took deposits and granted loans to local retail
co-operative societies, it was not long before it was acting as a bank for personal
customers.

The Bank grew steadily with branches opening in Newcastle, London and Glasgow and
after the First World War, the first in-store banking points were established in Co-op
stores and more branches were opened in key locations.

By 1972 The Co-operative Bank, which was then known as The Co-operative Bank, had
32 branches throughout the country and in 1975 The Co-operative Bank became the first
bank for some 40 years to join the Committee of London Clearing Banks. From then on,
it has grown at a rapid rate.

Today, The Co-operative Bank is the only UK Clearing Bank to publish an ethical stance
whereby it clearly tells its customers who it will and will not do business with. Since
launching its ethical positioning in May 1992, thousands of concerned people who do not
wish their money to be used for unethical reasons have had the opportunity to choose a
bank that will not do business with unethical companies and organisations.

The Co-operative Bank was one of the first banks to offer its customers a 24 hour a day
telephone banking service and it is now one of the biggest telephone banking operators in
the UK. It has call centres at Skelmersdale and Stockport for personal customers and at
Salford for its Business Direct telephone banking service especially developed for small
and medium sized companies.

The Co-operative Bank has over 140 outlets covering most major towns and cities in the
country and is a member of the LINK consortium, which means customers can use over
35,000 ATMs throughout the UK free of charge. In May 1994 the Co-operative Bank
launched the first fully automated Bankpoint Kiosk which is an unstaffed outlet that is
also available 24 hours a day, 365 days a year. Customers can use the LINK cash
machine, an automatic deposit machine, and a video telephone link with The Co-
operative Bank's Armchair Banking Service.

Over the years the Co-operative Bank has gained a reputation for introducing innovations
that were later to be adopted by the rest of the industry. For example, since 1974 The Co-
operative Bank has consistently offered free banking for personal customers who remain
in credit and was the first Clearing Bank to offer an interest bearing cheque account
called Cheque & Save.

In 1991 The Co-operative Bank shook the credit card market when it introduced a
guaranteed ‘free for life’ Gold Visa card, and in 1993, The Co-operative Bank launched
another ‘free for life’ Visa card named the Robert Owen card after the social reformer
who was considered to be the father of the consumer Co-operative Movement.

In 1996 The Co-operative Bank introduced the lowest ever interest rate credit card - the
Advantage card, especially designed for people who constantly borrow and so find a low
interest rate more advantageous than an interest free period.

In 1997 The Co-operative Bank celebrated its 125th anniversary by launching its
Partnership approach, becoming the first company in the UK to produce a ‘warts and all’
social report involving all of the seven partners involved in The Co-operative Bank's
activities.

The Co-operative Bank’s reputation for innovation was again demonstrated in October
1999 when they launched smile, the first full Internet bank in the UK. smile has been a
breath of fresh air in the banking market, with its costs reflecting the reduced costs of
Internet banking - offering its customers higher interest rates for savings and lower
interest rates for borrowing.

The Co-operative Bank made a return to the mortgage market in 2000 when it launched a
green flexible mortgage.

In 2001, The Co-operative Bank launched the UK's first ever fixed rate credit card, which
offered a guaranteed rate of interest until 2006.

In 2002 The Co-operative Group board announced the formation of

Co-operative Financial Services Ltd (CFS). The move followed the decision to bring The
Co-operative Bank and Co-operative Insurance Society (CIS) closer together under
‘common strategic leadership’.

In 2009 Britannia merged with The Co-operative Bank. The joining of two strong,
ethically minded businesses provides a real alternative to other banks on the high street.

In addition to over four million customer accounts, The Co-operative Bank is banker to
local authorities, many businesses and particularly the retail co-operative movement.