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 only

2 and 3 only

1 and 3 only

1, 2 and 3

APEDIA

UPSC Prelims

2021 • 10 Oct, 2021 • Paper-1

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?

Correct Answer

2 and 3 only

Regulatory Framework: Urban Cooperative Banks (UCBs) in India operate under a dual regulatory framework overseen by the Reserve Bank of India (RBI) and the Regi......

💡 Analysis & Explanation

Regulatory Framework ▼

Urban Cooperative Banks (UCBs) in India operate under a dual regulatory framework overseen by the Reserve Bank of India (RBI) and the Registrar of Cooperative Societies, not by local boards established solely by State Governments. Thus, statement 1 is incorrect.

Capital Issuance ▼

UCBs have the authority to raise capital by issuing equity shares as well as preference shares to members in order to meet their regulatory capital requirements. Hence, statement 2 is correct.

Legislative Inclusion ▼

Cooperative banks were legally integrated into the formal banking oversight mechanism when the Banking Regulation Act of 1949 was amended in the year 1966, granting RBI the necessary regulatory powers over them. Therefore, statement 3 is correct.

Conclusion ▼

Statements 2 and 3 are factually accurate.

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