Banks for Cooperatives

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Definition: Banks for Cooperatives

These banks were set up mainly targeting the agricultural farmers, to provide help to them for their marketing and supply activities and also for rural utility companies. They were sponsored by the US federal government and 12 such banks were set up in 1933.

The main mode of operation is by selling debt securities and bonds which are in turn issued by a federal farm credit bank. According to recent rule passed in 2006, every district should have a cooperative bank.

Banks for cooperatives give financial services to farmer-owned cooperatives, rural utilities like electricity, telephone etc and other important things like sewer and water systems in the rural areas.

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