Difference Between Nationalised Banks and Cooperative Banks

Indian Banking Systems provides many services to the public sector elevating the Indian economy. These banks are regulated by the Reserve Bank of India and come under the Parliament Act of Government of India.


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

Nationalised Banks vs Cooperative Banks

The difference between Nationalised Banks and Cooperative Banks is that the former is operated and regulated by the Government of India. In contrast, the Cooperative Banks are operated and regulated by the individual person and not by the Government of India. Nationalised Banks are to be found everywhere within the country, while Cooperative Banks are limited to the specific local area.

Nationalised Banks vs Cooperative Banks

Nationalised Banks are made for the public. Therefore, the 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.

The staff members are recruited by IBPS.

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

The staffs are locally appointed by the banks and are known to its Directors. As the services are limited in the bank, therefore, 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 own by the public and not by 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 Reserve Bank of India.Regulated by Reserve Bank of India and RCS.
StaffIBPS recruits the staff members.The staff members are locally appointed and are known to its Director.

What are Nationalised Banks?

These are the banks regulated and monitored by the Reserve Bank of India (RBI). They are meant for the public sector.

Provides them with financial services such as – saving account, current account, 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 reasons which are mentioned – for social welfare, developing banking sectors, also 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 need. Because the public owns these, therefore, 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 rural areas of the country. 

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

Cooperative Banks have emerged as a real alternative in front of the age-old tradition of high-positioned landlords from whom small farmers used to seek loans, and these high landlords’ giveaway them with higher interest rates. 

As 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 the 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 Act of Parliament, while Cooperative Banks are those banks that are set up registering under Banking Regulation Act and are owned by cooperative societies. 
  2. As Nationalised Banks are governed by Government, therefore, most of their shares are accompanied by them only while Cooperative Banks are owned by the public; 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 single specific local area.
  4. In India, every bank which exists is regulated by the Reserve Bank of India so do Nationalised Banks, while Cooperative Banks are regulated by two bodies – one is RBI, and the other is RCS.
  5. Nationalised banks are able to provide a large number of credit loans to their customers, while Cooperative Banks are able to give only a small amount of credit loans.  


  1. https://www.jstor.org/stable/4413434?casa_token=lqwHVY6fgs4AAAAA%3AJt5AJuAQhNuXPS167EHVab7xUYoy5yd2OpmCM4LfqFKDZuMe-GQZ_bm0ffZTA62HSCAnmrTd2EgjJUmf5e0ymm61O9jLCNWAPqD7qqNyLnnZCRJi79msEw&seq=1#metadata_info_tab_contents
  2. https://www.researchgate.net/profile/Vijay-Joshi-14/publication/262144765_Indian_Banking_Industry_Challenges_And_Opportunities/links/0deec536c6b9584499000000/Indian-Banking-Industry-Challenges-And-Opportunities.pdf
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