UPSC Previous Year Question | Prelims GS | 2021

With reference to 'Urban Cooperative Banks' in India, consider the following statements: 1. They are supervised and regulated by local boards set up by the State Governments. 2. They can issue equity shares and preference shares. 3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966. Which of the statements given above is/are correct?

  1. 1 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer

Correct Answer

2 and 3 only

Explanation

Statement 3 is correct: UCBs were brought under the Banking Regulation Act, 1949 (as applicable to co-operative societies) through the 1966 amendment. Statement 2 is correct: UCBs can raise capital by issuing equity, preference and special shares as per RBI norms. Statement 1 is incorrect: UCBs are regulated by the RBI for banking functions and by the Registrar of Co-operative Societies for incorporation and management; there are no 'local boards set up by State Governments' supervising them.

Topics: banking & monetary policy, cooperative banking, economy, regulation of urban cooperative banks