Q. With reference to ‘Urban cooperative Bank’ in India, consider the following statement:
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 statement given above is/are correct?

[A] 1 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: B

Why this question) The Reserve Bank of India (RBI) has revised the Supervisory Action Framework (SAF) for Urban Co-operative Banks; cooperative banks are brought under the supervision of the Reserve Bank of India (RBI).  

Ans) b 

Exp) Option b is correct. 

Statement 1 is incorrect. 

The Urban Banks Department of the Reserve Bank of India is vested with the responsibility of regulating and supervising primary (urban) cooperative banks, which are popularly known as Urban Cooperative Banks (UCBs). 

Statement 2 is correct. 

A cooperative bank can, with prior approval of the RBI, issue equity shares, preference shares, or special shares to its members or to any other person residing within its area of operation, by way of public issue or private placements. 

Statement 3 is correct. 

Large cooperative banks with paid-up share capital and reserves of Rs.1 lakh were brought under the purview of the Banking Regulation Act 1949 through an amendment in 1966. 

Source)  Reserve Bank of India – About Us (rbi.org.in) 

Explained: Why is the NCP opposing RBI supervision of cooperative banks? | Explained News,The Indian Express 

History of Urban Co-op Banking – The Sutex Co-operative Bank Ltd. (sutexbank.in) 

Subject) Economics