UPSC CSE Prelims
Question 95
With reference to 'Urban Cooperative Banks' in India, consider the following statements:
- They are supervised and regulated by local boards set up by the State Governments.
- They can issue equity shares and preference shares.
- 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?
View correct answer and explanation
Correct answer: B
Correct Option: B (2 and 3 only)
Explanation: Urban cooperative banks have RBI banking regulation alongside cooperative-law oversight; applicable rules permit certain share issues. Cooperative banks were brought under the Banking Regulation Act’s provisions in the 1960s.
Statement / Pair / Item-wise Analysis:
1. Incorrect / does not qualify - Regulation/supervision are not by State-created local boards alone; RBI and cooperative authorities have roles.
2. Correct / qualifies - Under applicable conditions, cooperative banks may issue equity or preference capital instruments.
3. Correct / qualifies - The 1965 amendment, effective in 1966, extended the Banking Regulation Act to cooperative banks.
Option-wise Analysis:
A. Incorrect-includes item 1, which is not valid (Regulation/supervision are not by State-created local boards alone; RBI and cooperative authorities have roles); omits valid item 2 (Under applicable conditions, cooperative banks may issue equity or preference capital instruments); omits valid item 3 (The 1965 amendment, effective in 1966, extended the Banking Regulation Act to cooperative banks).
B. Correct-selects exactly the supported statements/items: 2, 3.
C. Incorrect-includes item 1, which is not valid (Regulation/supervision are not by State-created local boards alone; RBI and cooperative authorities have roles); omits valid item 2 (Under applicable conditions, cooperative banks may issue equity or preference capital instruments).
D. Incorrect-includes item 1, which is not valid (Regulation/supervision are not by State-created local boards alone; RBI and cooperative authorities have roles).
Review note: Capital instrument permissions depend on subsequent legislation and RBI guidelines; statement is read in its exam-period context.