Co-operative Bank Scams in India
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"The objective of co-operative banking is to create enduring and sustainable financial institutions which remain responsive to the credit needs of weaker sections."
- RBI Report on Trend and Progress of Banking in India, 2000-01.
"There has been a mushrooming of co-operative banks in the country. Low barriers to entry spurred individuals with vested interests to start such banking ventures with a view to milk the depositors funds."
- Suresh Hemmady, chairman of the Shamrao Vithal Cooperative Bank.
"They are non cooperatives under the camouflage of cooperatives."
- Rama Reddy, President of Hyderabad based Cooperative Development Foundation.
Cooperative banks were established in India to facilitate rural credit, and to cater to the needs of small farmers and businessmen.
Many of these banks did not adhere to the prudential norms prescribed by the Reserve bank of India (RBI).
1] Government securities are certificates issued by the Government of India through the Reserve Bank of India confirming money received from an individual or institution in the form of debt. Deals in government securities trading can be wholesale or retail. Wholesale trading takes place when the transaction value is more than Rs. 50 million. Most wholesale deals are conducted through brokers who bring the two parties together. However, the broker is not involved in settling transactions.