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.

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.

Also Read:  Quid vs Euro: Difference and Comparison

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.  
Also Read:  Mobile Money vs Mobile Banking: Difference and Comparison



Last Updated : 11 June, 2023

dot 1
One request?

I’ve put so much effort writing this blog post to provide value to you. It’ll be very helpful for me, if you consider sharing it on social media or with your friends/family. SHARING IS ♥️

24 thoughts on “Nationalised vs Cooperative Banks: Difference and Comparison”

  1. A well-structured and informative piece of writing. It effectively outlines the critical roles of both nationalized and cooperative banks in India’s financial system.

  2. The comparison table provided a clear view of the differences between nationalized and cooperative banks. It’s a helpful guide for those seeking to understand this sector.

  3. The article effectively conveyed the critical roles of cooperative banks in rural development. The content is invaluable, especially in understanding their importance.

  4. The article provides a comprehensive view of cooperative banks, highlighting the various roles they play in supporting rural economies.

  5. The article presented the difference in staff recruitment and influence between nationalized and cooperative banks in a very intelligible manner.

  6. The article emphasizes the societal importance of cooperative banks in supporting small business owners and farmers in various sectors – truly enlightening.

  7. The distinction made between Nationalized Banks and Cooperative Banks is enlightening. It’s great to see the social welfare angle from which nationalized banks emerged.

  8. This article is very informative in elaborating on the key takeaways and differences between nationalized and cooperative banks. A comprehensive and insightful piece.

  9. The article provides an effective comparison between nationalized and cooperative banks, showcasing the importance of these banking systems in India’s economy.

  10. The context provided around the emergence of nationalized banks in the Indian economy for social welfare purposes was particularly intriguing.

  11. The article does an excellent job elucidating the roles of cooperative banks and their main objectives, providing a comprehensive view of their functions.

  12. An insightful read presenting a detailed comparison between nationalized and cooperative banks, shedding light on their significant differences.

  13. The article’s explanation of cooperative banks emerging as an alternative to traditional high-interest lenders enriches the understanding of the sector’s evolution.

  14. I agree, especially the fact that cooperative banks aim to foster savings and investment habits in rural areas is worth highlighting.

  15. An engaging and well-researched article, providing an in-depth analysis of the distinguishing features of nationalized and cooperative banks.

  16. The detailed information, especially the categorization of cooperative banks, was informative. The section outlining their support for farmers is enlightening.

  17. The article provides a clear and comprehensive view of how nationalized and cooperative banks operate, shedding light on lesser-known aspects of their functions.

  18. The detailed explanation of how cooperative banks are supporting small farmers and businesses is impressive. The article brilliantly covered this aspect.

  19. The article effectively brought out the distinctions between nationalized and cooperative banks, presenting their functions and importance in the Indian economy.

  20. An educational and insightful article, effectively detailing the functioning and significance of nationalized and cooperative banks.

  21. I found the explanation of the emergence of nationalized banks for the development of investment habits and social welfare very insightful.

  22. The detailed comparison and the insights provided into the Nationalised and Cooperative banks’ operations are highly valuable. The article is a great resource.


Leave a Comment

Want to save this article for later? Click the heart in the bottom right corner to save to your own articles box!