Nationalised vs Cooperative Banks: Difference and Comparison

Indian Banking Systems provides many services to the public sector elevating the Indian economy. The Reserve Bank of India regulates these banks through the Parliament Act of the Government of India.

Many types of banks are present in India – Nationalised Banks, Cooperative Banks, Scheduled Banks, Private Banks, Non-Scheduled Banks, etc. The bank provides loans, savings and current accounts, credit, ATM card services, etc.

Key Takeaways

  1. Nationalized banks are government-owned and controlled, while cooperative banks are owned and controlled by their members.
  2. Nationalized banks have a wider reach and operate nationwide, while cooperative banks are mostly limited to specific regions or cities.
  3. Nationalized banks provide various services to customers, while cooperative banks focus more on agriculture, small-scale industries, and local businesses.

Nationalised Banks vs Cooperative Banks

Nationalised bank is a type of bank which is controlled by the government. These banks can be operated anywhere within the country. Financial services are also provided by these banks. A bank which is controlled by any person is called a cooperative bank. These banks can only be operated in a local area. There are four main categories of these banks.

Nationalised Banks vs Cooperative Banks

Nationalised Banks are made for the public. Therefore, banks provide large credit loans and services to their customers.


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These banks give you additional services such as lockers, forex, etc. They record their information and data on computers.

IBPS recruits staff members.

Cooperative Banks are the banks formed by cooperative societies under Banking Regulation Act. These banks have limited resources and thus do not afford computerisation in every branch.

The staffs are locally appointed by the banks and are known to its Directors. The bank’s services are limited, so the capital requirements are less.

Comparison Table

Parameters of ComparisonNationalised BanksCooperative Banks
DefinitionThese banks are meant for the public sector by the Government of India.These banks are formed under the Banking Regulation Act and are owned by the public, not the Government.
ShareholdingThe Government of India holds the shares.The shares are held by its members only.
Area of OperationThese banks are operatable everywhere around the country.These banks are limited to a local area.
RegulationRegulated by the Reserve Bank of India.Regulated by the Reserve Bank of India and RCS.
StaffIBPS recruits staff members.The staff members are locally appointed and are known to the Director.

What are Nationalised Banks?

The Reserve Bank of India (RBI) regulates and monitors these banks. They are meant for the public sector.

Provides them with financial services such as – saving accounts, current accounts, credit cards, ATM cards, credit loans, etc.

Before, banks used to function under private sectors but now transferred from nationalism, and that is how nationalised banks came into existence.

Nationalised banks came into existence for some of the mentioned reasons – for social welfare, developing banking sectors, and developing the habit of investment among people.
Examples of some nationalised banks in India are – Allahabad Bank, Bank of India, Canara Bank, Union Bank, Punjab National Bank, Central Bank of India, Dena Bank, etc.

nationalised banks

What are Cooperative Banks?

Cooperative banks are established and owned by cooperative societies or individuals to provide equal shares of financial needs. Because the public owns these, the account holder or customers, as we can say, are also the owners of these banks.

They are regulated by the Reserve Bank of India (RBI) and RCS. These banks come under the Act of Banking Regulation Act.

They aim to incorporate the sense of savings and investment habits among people living in the country’s rural areas. 

These banks support small business owners in establishing manufacturing, transportation, and production services. Also, they are meant for the development purposes of farmers – in agriculture, livestock, dairy item production, etc. 

Cooperative Banks have emerged as a real alternative to the age-old tradition of high-positioned landlords from whom small farmers used to seek loans. These high landlords give them higher interest rates. 

The penetration of these banks in rural areas is about 67% because of the staff appointed in the banks, which helps them to function smoothly and effectively. They are mainly located in two areas- Urban and Rural areas. 

These banks can be majorly categorised as follows – 

  1. Primary Co-operative Banks – These banks mainly work with urban and semi-urban regions and provide concessional refinance services to their customers received from RBI and IDBI. 
  • State Co-operative Banks – These banks are operated at the district level and can giveaway loans at 1-2% lower interest rates than the standard rates fixed by the Reserve Bank of India (RBI). 
  • Central Co-operative Banks – These banks are operated and organised by cooperative societies or individuals. These banks deal with primary members of society and offer them loans only for 1-3 years and not more than that. 
  • Land Development Banks –  These banks are monitored by National Bank for Agriculture and Rural Development (NABARD). And mainly focuses on the development of farmers. 
cooperative banks

Main Differences Between Nationalised Banks and Cooperative Banks

  1. Nationalised Banks are set up under the Government of India by the Act of Parliament. At the same time, Cooperative Banks are those banks set up and registered under Banking Regulation Act and are owned by cooperative societies. 
  2. As Government governs Nationalised Banks, most of their shares are accompanied by them only, while the public owns Cooperative Banks; therefore, their shares are owned by them only. 
  3. Nationalised banks operate mainly across every corner of India, while Cooperative banks are limited to a specific local area.
  4. In India, every existing bank is regulated by the Reserve Bank of India, and so do Nationalised Banks. In contrast, two bodies regulate Cooperative Banks – one is RBI, and the other is RCS.
  5. Nationalised banks can provide many credit loans to their customers, while Cooperative Banks can give only a small amount of credit loans.  


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