Cooperative banking has been looking for years for its place in Polish banking and economic system. The current two-tier structure of cooperative banking was developed partly by the process of own trial and error, by following solutions worked out in Western cooperative groups, and partly as a result of more or less right interference of public and supervisory authorities. However, it needs time to become firmly established, to strengthen, and to cope with varied challenges. Part of the latter applies to all Polish banks, but they include a good deal of challenges specific to the cooperative sector. The paper presents only those specific development issues. Issues of: working out adequate market strategies, building a recognisable brand and sound reputation, acceleration of technical and technological modernisation, as well as the necessity of the continuation of consolidation and capital strengthening of local banks and their affiliations have been discussed in particular.