Regulation and Features of Urban Cooperative Banks

EconomyBanking & RBIStatement-based● MediumCurrent-affairs-linked

Question

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.

Options

1 only

2 and 3 only

Answer

1 and 3 only

1, 2 and 3

Explanation

Statement 1 is incorrect because Urban Cooperative Banks (UCBs) are regulated by both the RBI (for banking functions) and the Registrar of Cooperative Societies (for management functions), not solely by local state boards. Statement 2 is correct as per the Banking Regulation (Amendment) Act, 2020, which allowed UCBs to raise capital through the issue of equity, preference shares, and bonds. Statement 3 is correct because cooperative banks were brought under the purview of the 1949 Act through an amendment in 1966. > Modern legislative amendments have aligned UCB governance and equity options with commercial banking frameworks under the RBI. Answer: (b).