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?
Answer:
(b)
Core Books/NCERT
Large cooperative banks with paid-up share capital and reserves of Rs. 1 lakh came under the purview of the Banking Regulation Act of 1949, starting from March 1, 1966. Therefore, statement 3 is correct. The recent Banking Regulation (Amendment) Act of 2020 empowers the RBI with all the powers, including those previously held exclusively by the registrar of cooperative societies. However, the powers of the registrar remain intact, but the RBI’s powers override those of the registrar. Therefore, statement 1 is not correct. The Reserve Bank has issued new guidelines permitting primary urban cooperative banks (UCBs) to raise capital through the issuance of equity shares, preference shares, and debt instruments. UCBs can increase share capital by issuing equity to individuals within their operational area who are enrolled as members and through additional equity shares to existing members. Therefore, statement 2 is correct.