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?
Show answer
Answer: B. Statement 1 is wrong: UCBs are regulated by RBI for banking matters and by the State Registrar of Cooperative Societies for management, not by local boards of State Governments. Statement 2 is correct: after the Banking Regulation (Amendment) Act, 2020, UCBs can issue equity and preference shares with RBI approval. Statement 3 is correct: they came under the Banking Regulation Act in 1966. So 2 and 3.
Watch for: Dual control by RBI and the State Registrar is often mistaken for 'state local boards'.
Why the other options are wrong
- A. Wrong because UCBs are not supervised by State Government local boards.
- C. Wrong because statement 1 is false.
- D. Wrong because statement 1 is false.
Source to check: Banking Regulation (Amendment) Act, 2020; RBI website, Urban Cooperative Banks section
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.