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Credit Cooperative Sector
The credit cooperative originated simply as cooperative banks providing credit for their members, but has since developed to become universal banks.
The organization of the credit cooperative sector is similar to that of the saving bank sector. There are large numbers of local credit cooperatives and a system of larger regional banks headed by a central clearing-house institution.
There are three tiers within the credit cooperative sector. These are:
- Local cooperative banks
- Regional central cooperative banks
- Federal clearing house institutions
Local cooperative banks
The first tier of this sector comprises local banks organized as cooperatives, whose members are local individuals and businesses. Members of the local credit cooperatives contribute capital.
Regional central cooperative banks
The local credit cooperative are headed by a second tier consisting of regional central cooperative banks, which are either stock corporations or registered cooperatives owned by the local credit cooperatives.
Federal clearing house institutions
Third tier consists of federal clearing-house institution, which is a stock corporation owned by the regional credit cooperatives. This is the most important category of credit cooperative banks in terms of volume of business (among top 10).
The relationship between the local credit cooperatives and the regional institutions of the credit cooperatives is similar to that between the local saving banks and the regional giro institutions. The local credit cooperatives raise relatively large amount of funds in the form of personal saving deposits, while regional institutions of the credit cooperatives do relatively little deposit banking and raise the funds by borrowing from other banks (particularly from local credit cooperatives).
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